Programmatic Lunch

Twitter Reports $107m Loss in Face of Low Advertiser Demand

Alex Spencer

Twitter logo IRL HQTwitter has reported net losses of $107m (£82m) in its earnings for Q2 2016 (the three months ended 30 June), off the back of revenues of $602m, up 20 per cent year-over-year.

However, the company seems to have overcome the most immediate threat it looked to be facing – a static, or even shrinking, user base. MAUs (Monthly Active Users) in Q2 were up three per cent year-on-year, and one per cent quarter-on-quarter, to 313m. Mobile MAUs made up 82 per cent of that number.

Ad revenues were up 18 per cent year-on-year to $535m, an increase of 18 per cent year-over-year – with mobile accounting for 89 per cent of ad spend – but admitted in its letter to shareholders that the company was seeing "less overall advertiser demand than expected".

The letter laid out Twitter's strategy for turning this around, as follows: "To achieve re-acceleration in our ads business, we need to continue to win our share of social marketing budgets and continue to deliver advertising solutions that extend beyond social marketing – into performance and premium mobile video budgets. These are large incremental market opportunities with strong growth that we believe Twitter is well positioned to capture over time.

"To do this, we’re focused on three main initiatives: building a rich canvas for marketers; driving increased ROI with improved measurement, bidding, and relevance; and increasing scale by leveraging Twitter’s unique total audience. We believe these areas of focus will enable us to deliver value to advertisers of all sizes and capture incremental budgets for both video and direct response ads over time."

On the company's earnings call, COO Adam Bain emphasised the importance of video ads: "On the video side, we have become a video-centric platform," he said. "Video is now the number-one ad format in terms of revenue on Twitter. It's interesting, because just a year ago, those set of products did not exist. So, we've seen a continuation of some of these trends overall, where promoted tweet advertisers were upgrading into video.

"There is a whole new set of video budgets out there today. These are these online video budgets. It's about a $10bn marketplace in the US. These are video budgets that today we basically don't qualify for, since the spend is going in other areas. There's a set of products and features that we're in development on to land those budgets. We have some good signs of early success around video, and especially around these online video budgets in terms of incrementality."