Diminishing brand marketer support drives Twitter down

Nicola Riches
By Nicola Riches | 27 April 2016
Jack Dorsey

The failure of brand marketers to apportion budgets to Twitter has been responsible for a set of disappointing quarter one figures for Twitter, the company has revealed.

In a set of first quarter figures issued this morning, Twitter announced a 36% year-on-year lift in revenues to $595 million. However, the company pointed out that this came in at the low end of its guidance range where analysts were expecting $608m.

Advertising revenues were up 37% over a year ago, representing sales of $530 million. But that number was down by quite some way on last quarter, when ads brought in $640 million in revenues.

“Year-over-year revenue growth from large brand advertisers was softer than expected,” the company noted, “although brand advertising remains our largest overall contributor to revenue.”

Meanwhile, it also issued very weak guidance for quarter two, expecting revenues between $590 million and $610 million - a huge step down from $678 million that analysts had estimated before today’s release.

Spending on video in quarter one largely replaced 'Promoted Tweet' spend, says Twitter, "as marketers traded up into higher performing video units from traditional 'Promoted Tweets'."

 The company added: "We’re hearing from marketers that growth in overall video spend on Twitter will be driven by tapping into incremental online video budgets, which in turn requires us to provide a set of additional features including more detailed demographic targeting and verification, and reach and frequency planning and purchasing."

Finally, the enhanced timeline is being pitched as a "great step forward", which it claims has been responsible for an increase in tweets, retweets, replies, and likes. The opt-out rate is indeed very low, hovering at roughly two percent.

Twitter’s stock is trading nearly 11% down following the issuing of the results.

Email Nicola at nicolariches@yaffa.com.au.

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