Twitter added users, video viewers in Q1 but ad revenue dropped 11%
- Q1 offered some noteworthy gains for Twitter, which added 9 million monthly users — its biggest jump in two years — and beat expectations for revenue and earnings even though revenue dropped 8% year-over-year, according to multiple reports, including from Variety.
- Video put in a strong performance during the quarter, with Twitter streaming more than 800 hours of live video and reaching 45 million unique viewers, a 31% increase from the previous quarter.
- On the advertising front, Q1 ad revenue totaled $474 million, down 11%, ad impressions increased 139% and the average cost per engagement dropped 63%.
Following months of negative reports about Twitter’s slowing growth and service cutbacks, the fact that there was any good news to report was well received, with Twitter’s stock trading up 8% late yesterday afternoon.
Still, the drop in ad revenue is a signal that the platform faces struggles ahead, especially as it is making a big bet on video — which Twitter says is the ad format that generates the most revenue — where there is stiff competition from a number of bigger players including Facebook and Amazon. The latter recently won the rights to stream a handful of NFL games by shelling out a reported $80 million between fees and marketing support. Last year, Twitter was the NFL’s choice for streaming games, with the move to Amazon this year highlighting two of Twitter’s shortcomings — its niche user base and tighter purse strings compared to some of its competitors.
During a call with analysts to discuss the quarterly results, Twitter described how its video program will expand in the months ahead, including its first appearance at the 2017 Digital Content NewFronts next week, the launch of a free weekly Major League Baseball in the second quarter and an exclusive live stream of the E3 video-game expo. Twitter recently moved to make its video ad business more competitive by rolling out in-stream video ad formats, which join promoted and sponsored video formats.
Sports is clearly a big focus of Twitter’s live video push and already accounted for 51% of live video in Q1. Going forward, the platform may be looking to beef up other areas like news, which accounted for 35% of live video in Q1 and entertainment, which was 14% of live video.
Twitter needs some big wins in video to support revenue growth as it continues to pull back on other areas, like its direct response business. During the conference call with analysts, Twitter’s CFO and COO Anthony Noto said the company will no longer invest in its retargeting platform TellApart, according to AdExchanger. Twitter also saw year-over-year declines in Promoted Tweets although it is still investing in app installs and mobile re-engagement.