Twitter ad revenue decline worsens

Twitter ad revenue decline worsens

Twitter reported a worsening decline in ad revenue today, despite a growth in user numbers, as promoted tweets and direct response ad formats got weaker at pulling in spend.

The US messaging service, which is still yet to make a profit after 11 years, posted first quarter 2017 earnings of $548m (£427m) – a drop of 8% year on year.

Advertising revenue was $474m – down 11% year on year – while there was a 13% drop in US earnings, which was barely mitigated by a 2% year-on-year increase in international revenue to $208m.

This means Twitter’s ad revenue is down 26% compared to the previous quarter, when it pulled in $638m (while total revenue was $717m).

Video continues to be Twitter’s single largest revenue-generating ad format, the company said in a letter to shareholders, with "strong growth" in pre-roll and live-streaming offset by decline in traditional promoted tweets and direct response ad formats.

Meanwhile, total ad engagements have more than doubled (up 139%) year on year, driven by higher video views and ad impressions.

However, earnings did beat Wall Street expectations of $512m revenue for the quarter. Twitter announced net income of $82m, or 11 cents per share, compared to an expected 1 cent a share. 

Monthly active users were 328 million for the quarter – up 6% year on year and 3% compared to the previous quarter. However, it still lags behind the likes of Facebook, which pulled in 1.86 billion monthly active users last quarter.

Twitter has attempted to woo advertisers with new content deals with media owners, including Sky Sports, Time Inc, and Condé Nast and said it streamed more than 800 hours of "live premium video" in the first three months of the year.

Of these, more than half (51%) were sport. 35% was news and politics, and 14% was entertainment.

The ad revenue outlook for the rest of the year may not be much better, Twitter warned in its letter.

The company said in a statement: "We continue to expect advertising revenue growth to continue to meaningfully lag that of audience growth in 2017, including in Q2."

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