Twitter Inc May Overhaul Ad Strategy To Capitalize On User Growth

Twitter said it will overhaul its ad strategy, shifting from older products such as promoted tweets and resorting to video ads, which, according to executives, are catching the attention of big-brand automakers. The micro-blogging firm is also looking to expand its data licensing business, which gets a fee from the companies that extract data from the billions of tweets every day.

Twitter TWTR
IMAGE: PixaBay

Twitter fails to capitalize on growing popularity

Twitter has benefited enormously since President Donald Trump started tweeting more, and now, it is looking to make the most of its growing popularity, which has so far failed to generate additional revenue for it, according to The Wall Street Journal.

On Thursday, the company announced that its user base had expanded by 11% in the fourth quarter, the same time around U.S. elections. However, revenue surged by only 1% to $717.2 million, marking the tenth straight quarter of sluggish revenue growth. In the fourth quarter, global ad revenue was flat, and in the U.S., it dropped 7%. Advertising accounts accounted for approximately 90% of its revenue.

Twitter CEO Jack Dorsey stated that the company would attempt to “resend and focus on the strength. Dorsey told analysts that the use of the platform by President Trump has increased awareness of how the platform can be used and how far-reaching of an effect it has.

“We can’t quantify any impact at this point in time, but we’ll continue to analyze it as we go through Q1 and talk to you at the end of the quarter,” Dorsey said.

Incompetent ad strategy

Wells Fargo analyst Peter Stabler said, “Every literate person in the entire world has heard of Twitter… The problem is that a great many of those people think they know what it is or have tried it and they don’t plan to go back.”

Stabler stated that the way people use Twitter and the way the company is looking to sell ads do not move in tandem. Users often ignore promoted tweets and direct response ads which look for an immediate action such as a purchase. Instead, they focus on the stream of news and commentary, the analyst noted.

According to Wall Street analysts, the result was a letdown, and few think that Twitter could be a takeover target again.

On Thursday, Twitter shares closed down 12.34% at $16.41. Year to date, the stock is up almost 1%, while in the last year, it is up more than 4%.