Trump Effect Does No Favours For Twitter As Ad Revenue Falls

Trump Effect Does No Favours For Twitter As Ad Revenue Falls

Shareholders banking on Donald Trump’s love for Twitter to boost the company’s financial results have been left disappointed, with the social media giant posting a slight drop in ad revenue.

Huntley Mitchell
Posted by Huntley Mitchell

According to Twitter’s results for the fourth quarter of 2016, advertising revenue was down 0.5 per cent to $638 million, with mobile accounting for 89 per cent.

Twitter’s owned-and-operated ad revenue was down one per cent year-on-year to $553 million, while its non-owned-and-operated ad revenue was roughly flat, reaching $85 million and accounting for 13 per cent of total ad revenue.

The platform’s total ad engagements grew 151 per cent year-over-year, which Twitter said was driven primarily by a continuing mix shift toward video ad impressions, as well as higher click-through rates across nearly all ad formats on a like-for-like basis.

Average cost per engagement (CPE) fell 60 per cent year-over-year, which was again due to a higher mix of video engagements, as well as significantly lower video CPE compared to the prior year, Twitter said.

The company reminded shareholders that it reorganised its partnership, sales, and marketing organisations in the fourth quarter “to better align and execute against our key priorities”.

“To better serve our ad partners, we reduced the number of sales channels from three to two,” Twitter said in a statement.

“Our advertising business continues to skew toward large branded advertisers in the US and Canada, with above-average growth in a few select international markets.”

Overall revenue for Twitter was up 1 per cent with a fourth-quarter figure of $717 million, while the number of average monthly active users on the platform was up four per cent to 319 million.

Average daily active usage continues to accelerate for Twitter, rising to 11 per cent year-on-year, from seven per cent in the third quarter, five per cent in the second quarter and three per cent in the first quarter of 2016.

Twitter CEO Jack Dorsey said the company expects the strong growth daily active usage to continue.

“While revenue growth continues to lag audience growth, we are applying the same focused approach that drove audience growth to our revenue product portfolio, focusing on our strengths and the real-time nature of our service,” he said.

“This will take time, but we’re moving fast to show results.”