Twitter Ad Distribution
This week Twitter posted their Q3 earnings, which were below expectations. They attribute their low advertising revenue to a change they made to better respect users’ privacy settings. Twitter gives users the option of whether or not to allow tracking of their device data in service of better advertisement targeting. However, prior to a recent fix, this option was not working as expected, and thus advertising was more effective than it should have been in previous quarters, leading unrealistic expectations for revenue in Q3.
However, as reported by Megan Graham at CNBC, and expanded upon by Zoe Schiffer at The Verge, Twitter also recently made another change to their advertising model which, in my opinion, could have lasting effects on the social network. Namely, they increased the amount of advertisements that their more popular users see. Previously the frequency of advertisements that a user saw correlated inversely with their popularity (i.e. their follower count). It appears that now they are shifting to a more equal distribution of advertisements to everyone in their userbase.
As advertisements are generally viewed as a necessity of social networks (see App.net) and not a feature, some of the more popular users on Twitter experiencing this increase in ads have not been happy with it. Because these people are by definition the most influential people in the social graph, if their regard for Twitter is lessened, it could affect the view of the social network en masse. The number of very popular users on Twitter is relatively small, and so the gain in revenue from this change could be not that significant. But because of the influence that these people have, the effect on the public opinion of the website could be more significant. Also, if these people are affected enough to leave the network altogether, this would have big implications on Twitter due to the network effect. However, the more popular a person is on Twitter, the more important the network likely is to them, and so they may be less likely to leave it because of small changes like this one.