Twitter has been unable to solve the problem of stagnating user growth and a declining stock price, and now it has another major issue to tackle: retaining advertisers and persuading them to stick to the platform. According to a recent survey, advertisers are souring on the social media platform faster than ever.
Advertisers moving away from Twitter
On Wednesday speaking to CNBC’s Squawk Alley, RBC lead analyst Mark Mahaney said, “There’s a real negative tell in here. Just like there are momentum stock buyers, guess what? There are momentum ad buyers, and the momentum is moving away from Twitter.”
The trend of advertisers turning away from Twitter began early last year, but according to the latest survey by RBC Capital Markets, there has been a significant jump in the number of advertisers that are contemplating reducing their expenditures on the website. The survey is conducted twice every year and asks about 2,000 advertisers to give ranks to companies based on criteria such as return on investment or the ability to directly track ad dollars spent on their platforms.
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Twitter’s stagnating user growth has brought it under the scrutiny of investors, and this has left Wall Street wondering where the company will get its future revenue growth from.
Alphabet, Facebook winners
Mahaney said Alphabet and Facebook are the top performers, and there is a very wide margin between Twitter and them. Facebook secured the second rank in the survey with impressive improvements in return on investment, according to the analyst. The social networking giant raised its ad prices, and this led RBC to keep a close watch for a correction in ROI, but 59% of the survey respondents reported growth in their ROI on Facebook.
Print media is the single largest loser in the migration to the Web, andadvertisers are diverting a larger percentage of their television budgets towards online ad spending. About 40% of the advertisers said the money they previously allocated to television is acting as a source of funds for Internet advertising. This number was 37% a year ago, and a half-year ago, it was 25%.
On Wednesday, Twitter shares closed down 3.68% at $17.66. Year to date, the stock is down by almost 24%, while in the last year, it is down by over 62%.