Who is driving Twitter’s revenue growth?

by CXOtoday News Desk    Oct 21, 2013

mobile strategy Twitter

According to the latest revenue figures released by Twitter, 77 percent of its average MAUs (Monthly Average Users) during the last quarter ended September 30 were based outside the US. But ironically, its revenues are still coming primarily from the US market. Statistics show that Twitter’s global operations are so far contributing only 26 percent of its consolidated revenue. This indicates that there is a huge untapped potential outside the US market that the company hasn’t been able to leverage so far.

Despite its plans to focus on emerging markets, the company has not able to offer its full features in some of these countries. In developing countries like India, Twitter users access the company’s products and services through feature phones with limited functionality. “This limits our ability to deliver certain features to those users and may limit the ability of advertisers to deliver compelling advertisements to users in these markets which may result in reduced ad engagements which would adversely affect our business and operating results,” said Twitter in its statement.

According to a PTI report, Twitter has attributed its inability to monetize its products and services internationally to the competitive landscape in other countries, advertiser demand, differences in the digital advertising market and differences in the way its users outside US utilize the services, among others.

Twitter’s ad monetization strategy

If we take a close look at Twitter’s revenue and metrics, we find that in 2012, the company saw $316.9 million in revenue, with $269 million derived from ad services.

“The company’s research, conducted in partnership with Datalogix, which tracks offline purchase, shows that Twitter ads do lead directly to sales,” Kevin Weil, Twitter’s vice president of revenue products was quoted as saying. For consumer brands advertising on Twitter, sales rose 8 percent among those who saw the ad, with higher increases from consumers who clicked on the ad or became followers of the brand.

“The advertising revenue numbers suggest that the company’s strategy of cutting advertising prices while offering more targeted ads is paying off handsomely,” says a report published in The New York Times. According to the report, every time a Twitter user visited the site, conducted a search or refreshed the screen in the third quarter, the social networking company took in an average of 97 cents in advertising revenue, up 49 percent from a year ago.

Advertisers should tap the ‘mobile’ users

A Twitter blog on advertising states that while an average Twitter user follows five or more brands, says users who primarily access Twitter on mobile are 60% more likely to follow 11 or more brands. They are also 53% more likely to recall seeing an ad on Twitter than the average Twitter user.

Twitter believes that mobile is in its DNA. Twitter’s 140 character limit of Tweets was based on text messaging or SMS constraints of the mobile user. Because mobile ads on Twitter are part of the organic content experience, they create a particularly powerful vehicle for brands to create reach, build frequency and drive engagement.

Twitter suggests that advertises should focus on creating Tweets that align with what mobile users need: real-time information that helps them make decisions as they go about their daily lives. “Think about creating campaigns centered around useful information or special offers that someone can act on immediately,” it says.