Despite little investor excitement in the run-up to its first quarter earnings statement, many were taken by surprise by the company’s worrying slump in ad sales.
Overall, the microblogging platform saw its revenue climb 36 percent from a year earlier to reach $594.5 million for the quarter. The final numbers fell below analysts’ expectations of $607.8 million, as reported by Thomson Reuters. Consequently, Twitter’s second quarter revenue forecast took a hit, with the company now predicting between $590 million and $610 million, which is significantly below Wall Street estimates of $677 million.
“Brand spend didn’t grow as quickly as expected,” said Twitter CEO Jack Dorsey. Fretting over a 37-percent growth in year-on-year advertising revenue may seem a tad overly self-critical, but it appears that Twitter’s advertising options are no longer a draw for big brands.
Promoted tweets, Twitter’s targeted ad placement feature, is reportedly under-performing, with brands instead opting to use videos, due to their higher rate of engagement.
Brands have held back their spending on traditional advertising options — which include call-to-action buttons that encourage users to click through to a website — and are blaming Twitter’s lack of targeting functions, reports the Wall Street Journal. The company’s financial chief, Anthony Noto, has promised that advertising improvements are scheduled for this fall.
There was, however, a small glimmer of hope for the company. During the first quarter, Twitter gained a respectable increase in its monthly active users, adding five million to its total, which stood at 310 million for the period — up from 302 million users a year ago.
Speaking to analysts via Periscope, Dorsey commented that the platform remains committed to making the Twitter experience “easy to use.” Since retaking the reins at the company last year, Dorsey has pushed to make Twitter more accessible through the addition of controversial new features, including an algorithmic timeline and Moments, an editorial-style, trending news feed. At the very least, the growth in total users hints the gambles may be paying off.
Twitter also has the advantage of its NFL streaming partnership, which will see it broadcast ten Thursday Night Football games over the coming months. Dorsey hinted that the deal could be one of many, claiming that once it was announced almost every major sports league in the world reached out to the platform with similar initiatives. The CEO previously revealed that live chat during major events is an integral part of its strategy, and it will be hoping that the NFL livestream will encourage even more users, and advertisers, to join the Twitter conversation.
