Twitter and Ad Auctions
Twitter stocks drop due to problems with their advertising issues and bugs. These issues were related to sharing of private information with advertisers and other information sharing. These bugs greatly reduced revenue for the third quarter as stocks plummeted. However, advertising revenue for the quarter actually increased, although it was still lower than the predicted revenue. This is because the ads are targeted and so when the advertisers are able to know more information about the consumers, they are able to know more information about how they can target through ads.
Twitters ads are bought and sold through an auction system like discussed in class. This relates to our discussion of second price auctions where the buying of ads is very similar to that of Facebook ads. This is where advertisers decide how much they are willing to pay for their ad and get them in the form of an auction. This is important because an auction is the most efficient way for ads but when advertisers can see more information than they are supposed to it can effect their spending. By allowing the advertising companies to see information about either the Twitter users or other advertisers, the companies can know if they should wait, raise their price or make other adjustments in their content.
https://www.cnbc.com/2019/10/24/twitter-twtr-earnings-q3-2019.html