April 30, 2015
Twitter stocks plunged this week after the company’s first quarter financial report showed less revenue growth than originally expected. The social network’s revenue grew 74 percent, which is lower than the company’s projections and its performance in the previous quarter. Twitter executives blame some of the company’s new advertising models as contributing to the slow growth, but other analysts believe that Twitter still has not found its niche among users and advertisers.
The Twitter stock was down 18 percent in one day after the quarterly report was released early. Investors had been counting on Twitter’s advertising to make up for the company’s difficulty in attracting new users.
However, executives believe that some of their new advertising models are not producing the expected revenue because ads are priced based on user interaction. For example, advertisers have to pay up if the user downloads the app in the ad, not if the user only clicks on the ad.
Twitter will try to boost its advertising performance by making ads easier to buy. It just acquired an advertising company called TellApart and it announced a new partnership with Google. Advertisers will now be able to buy Twitter ads through Google’s popular DoubleClick advertising platform and track their performance using Google Analytics, according to The New York Times.
One of the biggest problems, though, is Twitter’s stagnating user base. In a related article, The New York Times reports many new users feel lost on the social network, and prefer Facebook and Snapchat because those services feel more personal. The company has worked to change that by adding a “Here’s What You Missed” feature and allowing users to direct message tweets and receive messages from strangers.
The company is still trying to figure out how to become a larger part of users’ private messaging habits, in addition to making sure that they can provide value without requiring someone to log in. The social network’s advantage is that it is the first to reflect what people are talking about, whether it’s an earthquake or a television show.