For Twitter, ads are its source of revenue generation, but those ads are not shown to all Twitter users, says a report from Re/code. There is a group of prominent and active users on the platform to whom the micro-blogging firm has stopped displaying ads or has reduced the number of ads drastically shown to them over the past few months.
Twitter focusing on prominent and active users
Twitter appears to be working towards offering an ad-free experience to its prominent users. With such a move, the micro-blogging firm intends to get some of its VIP users to remain engaged. The micro-blogging firm always had its focus on attracting new users, and it never tried to please its hardcore base. Therefore, with this move, it wants to compensate such users for the years of neglect.
Citing Twitter sources, the report says star power is not the sole criterion for selecting a no-ad or low-ad group. Instead, it uses a variety of criteria such as the volume and reach of the tweets they generate. Twitter is facing many issues, but ad dollars are not among them, therefore, the company can afford to turn off ads for a small group of users. Twitter generated almost $2.2 billion in revenue from ads in 2015. If Twitter thinks that by not showing any ads to some it will be able to attract more users to its platform, then it should consider an ad-free option that is supported by subscriptions.
Twitter representative Will Stickney told re/code, “We’re constantly looking at constraints and adjustments to optimize which ads are shown and how often.”
On Monday, the company’s shares dropped sharply after the revelation of the departures of four top executives. The stock is down 68% from its 52-weeks and by 55% over the past year. Shares were down 4.6% yesterday to close at $17.02. Year to date, the stock is down by over 26%. This indicates a serious situation for the company.
However, the company still has one powering aspect: its huge cash hoard of $3.5 billion. This can buy the company a lot of time. If it uses $8.5 million a year in free cash (as it did in the last 12 months), it has sufficient cash to last 412 years, says a report from USA Today.