Problems in Twitter advertising led to poor growth in revenues
Twitter stocks took a deep plunge on Thursday, owing to poor growth in the third quarter. Apparently, the company claimed that there were various issues or ‘bugs’ that made it quite difficult to bring in advertising revenue. The overall profits for Q3 stood at $37 million, which roughly amounts to Rs. 260 crores.
As a matter of fact, the revenue increased by 9% as compared to last year and stood at $824 million (approximately Rs. 5800 crores). However, it was still on the lower side when compared to the Wall Street forecasts. Apparently, the ‘revenue product issues’ are to be blamed for this downfall.
There has been a 20% decline in Twitter stocks during pre-market trade portraying disappointing results. Twitter claims that it had expected its stocks to take a downward trend. However, a few unwanted issues cropped up. Twitter advertising took a beating due to a few unwanted glitches leading to a ‘revenue miss’.
According to statements made by Twitter’s investor relations team, the company has taken appropriate steps to rectify bugs that hampered the Mobile Application Promotion (MAP) product in Q3. These issues were responsible for Twitter’s inability to focus on advertisements and share data with measurements and advertising partners. If not for these bugs, the company would not have experienced such poor revenue growth in Q3.
What can we expect in Q4?
Twitter does not expect much revenue in Q4 as well. It expects to make money ranging from $940 million to $1.02 billion. Previously, the earnings for Q4 forecasted at $1.06 billion. Twitter has lowered down its expectations in Q4 owing to its poor performance in Q3.
An analyst from eMarketer Jasmine Enberg feels that there are many more challenges ahead for Twitter in Q4. She implies that the company would have to be extremely cautious with their ad products in Q4.
Twitter’s crackdown on abusive behavior
Chief Executive of Twitter Jack Dorsey has stated that the company is all set to bring in a lot of changes and improvements to the platform’s algorithm. They are also in the process of tracking down and eliminating abusive content from the entire platform, thus improving its overall health. Dorsey said that in Q3 itself, they had removed about 50% of abusive tweets taken down without a bystander or first-person report.
According to analysts, Twitter scores better than Facebook when it comes to targetting and removing abusive behavior. In fact, Facebook has not yet confirmed whether it would remove hate speeches from political candidates from its platform.
Wendy Johansson of digital consultancy Publicis Sapient feels that Twitter is more inclined towards its core experience. For them, politics are not that important.
He has stated that “They’re not out fighting a political war like Facebook – they’re focused on building the best tech and getting users addicted to the tech.”
Promoting platform growth
Twitter started a new growth metric last year called monetizable daily active users, also called as mDAUs. These numbers show the total number of users who view ads on Twitter.
In fact, in Q3, the company has recorded 145 mDAUs. It is actually a 4% increase as compared to Q2 of 2019, which recorded 137 mDAUs.
Twitter feels that due to this ‘monetizable’ distinction, its mDAUs are lesser than the ones of Snap and Facebook. These two firms have recorded DAUs of 210 million and 1.59 billion, respectively.
CFO of Twitter Ned Segal has stated that the company would continue to focus on long-term growth. He feels that there is a lot of scope towards improving revenue products and delivering them. He said that the firm would continue to focus on giving high priority to advertisements along with health and investments in order to achieve good growth in terms of mDAU.