Twitter Ad Revenue
https://marketingland.com/twitter-ad-revenue-growth-slumps-to-8-in-q3-even-as-user-growth-continues-269634
Despite user growth, Twitter’s ad revenue for the third quarter failed to meet expectations. According to Twitter CFO Ned Segal, the main factor the issue may be attributed to is an issue with its Mobile Application Promotion (MAP) product, specifically in its product and personalization data settings. This relates to the concept of targeted ads we discussed in class — by analyzing user data, the ads that individuals see can be tailored to them, optimizing how many times a user clicks on and makes a purchase because of that ad. This is much more effective than general, blanket ads, which are inefficient and widely ineffective. However, in Twitter’s case, a bug in its MAP product “impacted Twitter’s ability to target ads and share data with measurement and ad partners”, reducing revenue substantially. This would lead to a decrease in click through rate ads, decreasing the advertisers’ valuations for an ad slot, and in turn, decrease the prices that advertisers pay for ads.
Another issue that Twitter has been met with: cost per engagement decreased by 12% year-over-year. While total ad engagements increased, advertisers are now paying less for those engagements, an idea not easily explained by what we explored in class. Although no formal reason was proposed, one possible explanation could be that platforms’ ability to target ads have increased, and this is a common phenomenon not specific to any one platform or company. In this case, the market supply of effective ads would increase, giving advertisers many options, and thus lowering the market equilibrium price of all ads. If this were the case, this would be an issue not just for Twitter, but for all similar social media platforms generating revenue from ads.