Twitter has decided that it needs to find additional revenues outside of its famed micro-blogging site and is looking to TapCommerce to offer promotions on tablets and smartphones. According to sources close to the deal, Twitter Inc (NYSE:TWTR) will pay nearly $100 million for the New York-based TapCommerce which sends promotions to those who have looked at goods to purchase but failed to finalize the sale.
Reliant on advertising
Twitter, since right around the time of its initial public offering, has seen user numbers slowing and has shifted towards acquisitions to find additional audiences for its advertisers. Twitter’s first quarter ad sales broke $250 million this year representing a near doubling of sales year-over-year. While Twitter relies on advertising for nearly all of its revenues, it’s still yet to make a profit.
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According to Richard Alfonsi, Twitter’s vice president of global online sales, TapCommerce sends ads to over 50,000 mobile applications. The acquisition follows Twitter’s acquisition of MoPub last October for $350 million. The latter was Twitter’s largest and allows the company to offer an ad exchange to advertisers that reaches over a billion mobile devices.
The acquisition of TapCommerce will give advertisers “access to additional off-Twitter inventory and buying opportunities,” Alfonsi said in an interview Sunday, “It’s another step in this bigger vision we’ve started to put together about mobile advertising.”
Slowing user growth
Just as Facebook will require years to reach its second billion users, Twitter faces a battle to reach its first. Those slowing growth numbers recently saw the departure of the company’s chief operating officer Ali Rowghani and the promotion of Alexander Roetter to head of engineering in May due to his advertising experience.
Perhaps more importantly (certainly for investors), Twitter has seen its stock price drop nearly 40% this year as analysts fear the company is mired in stagnant growth in both users and ad sales.
“Being a part of the Twitter team will allow us to dedicate more resources to developing our product and expanding our services, so that you can continue to deliver even more value from your campaigns,” Brian Long, chief executive officer of TapCommerce, wrote in a blog post yesterday.