Twitter has long been struggling with a stagnant user growth issue, and now a survey released on Thursday showed that for the first time, advertising agencies are turning more to Instagram than the micro-blogging site, says Reuters. The report highlights the weakness in Twitter’s ad sales operation, which has been one of its few good areas.
Cracks in ad business emerged during Q1
Twitter’s advertising operations under Chief Operating Officer Adam Bain had been a relative oasis of stability amid the ongoing management turmoil, stagnant user growth and declining stock price. Bain joined the micro-blogging giant in 2010, and in just over three years, he helped build the company from nothing to more than $1 billion in revenue.
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However, losses in the ad business started to emerge in the first quarter earnings report when the micro-blogging site provided a weak revenue forecast and missed its numbers due to lower-than-expected spending by big advertisers. Since the April earnings announcement, the stock has fallen 15%, and on Wednesday, it closed at $14.60 — far below its $26 IPO price in November 2013.
In terms of active users in the U.S., Snapchat was on pace to supersede Twitter, highlighting the threat that the micro-blogging site faces from faster-growing competitors, said research firm eMarketer earlier this month.
This newest survey, which is from a unit of Comcast called Strata, comes in the same week Twitter said its head of product, who took over the team in September, was leaving.
Twitter rejects the survey results
For its survey, Strata researchers talked to 83 advertising agencies, asking the social platform that their clients preferred for social media campaigns. Around 56% said they would use Twitter, while 63% said they were most likely to use photo-sharing app Instagram. Facebook dominated with 96% of advertisers voting in its favor.
Twitter was not happy with the survey results and pointed to a 2015 study by Advertiser Perceptions that showed 28% of advertisers intended to buy ads on Instagram, whereas 37% of advertisers intended to buy ads on the micro-blogging site.
“The data presented in this survey couldn’t be farther from the truth,” a Twitter spokesperson said. “We have close relationships with our agency clients and continue to hear that Twitter offers the most powerful creative canvas.”
According to some ad agencies, their clients are shifting their budgets to the photo-sharing platform because it has more users than the micro-blogging site. Instagram has more than 400 million users, while the micro-blogging site has 310 million users. Another reason could be Facebook’s ad technology, which allows advertisers to target highly specific audiences.