Twitter says TV strategy will spur growth

Twitter is hoping to allay investors’ concerns about its slow user growth by ramping up efforts to help marketers complement their TV spend on the platform.

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Twitter says its plans to ramp up its complementary to TV ad strategy will spur future growth.

Twitter added 3 million users in the three months to 31 March, bringing its total monthly active user figure to 255 million. That growth figure was up from the 1 million additions it posted in the fourth quarter, but still came in at the low end of analysts’ estimates, driving Twitter’s share price down as much as 11 per cent in after hours trading.

Speaking on a call with analysts shortly after reporting its first quarter results, Twitter’s chief financial officer Mike Gupta said the company is currently partnering with a number of broadcasters and agencies during their upfront meetings and that it is signing up international brands to its Amplify programme to help them use Twitter to complement their programming and TV ad spend.

Over the course of the last year Twitter has made a number of improvements to its complementary TV ad set, such as adding TV conversation targeting and launching its Twitter Amplify programme in the UK at the turn of the year, which allows brands and broadcasters to create in-tweet video clips or streaming.

Gupta added: “Advertisers are truly recognising that Twitter complements and extends their ad spend on TV. It really increases the effectiveness of the TV advertising.”

Twitter CEO Dick Costolo pointed to an array of studies that “validates” its investment in its TV strategy. This includes a study from FOX Research that showed 92 per cent of Twitter users took an action after tuning into a TV show, searching for a TV show or seeing a tweet about that programme; a Symphony Advanced Media study that found use of Twitter while watching a programme decreases that users’ chance of changing the channel; and Nielsen that found a causal relationship between Twitter activity and TV viewing.

Rival Facebook has long been touting its platform as complementary to TV, encouraging advertisers to book “TV plus” campaigns. It regularly refers back to a case study in partnership Mondelez’ Creme Egg brand, which used TV and Facebook ads to drive a 66 per cent uplift in sales among its target audience of 18 to 25-year-olds.

Costolo said Twitter is consistently hearing that they get “better than expected” ROI on the platform. He cited clothing retailer American Apparel which used its Lead Generation Card format to attract new customers and gained an average $90 order value from each customer, plus American Express and GetTaxi which have both said Twitter is their number one acquisition channel.

Twitter’s Q1 performance

Revenue grew 119 per cent year on year and 3 per cent quarter on quarter to $250m. It posted a net loss of $132m as it continued on its acquisition trail, international expansion and increased sales and marketing efforts.

Ad revenue made up 90 per cent of the revenue total, a performance the site said was driven by continued improvements to its targeting offering, the rich media experience on the platform and strong demand from advertisers, particularly around live events in the US such as the Super Bowl, Oscars and the Grammys.

User engagement with ads on Twitter was up 700 per cent year on year and 28 per cent quarter on quarter. Twitter said this was, in part, due to strong marketer adoption of its TV ad product set – which includes Amplify, keyword targeting and TV conversation targeting.

Mobile made up 80 per cent of advertising revenue, up from 60 per cent in the same period the previous year.

Timeline views, a useful metric for measuring user engagement with the platform, were up 15 per cent year on year and up 6 per cent quarter on quarter to 157 billion. Twitter said timeline views for monthly active users were stable quarter on quarter, which suggests new users are just as engaged as existing ones.

The average cost per ad engagement was down 20 per cent quarter on quarter, which Twitter said was “more than offset” by the 28 per cent increase in ad engagements that it said was driven by higher quality brand ads.

Costolo hinted in the call that Twitter is looking to make improvements to its Direct Messaging function over the coming months, to bring its service more in line with likes of competitors such as Facebook Messenger, Whatsapp and Line as it looks to target international territories where “the private conversation is culturally looked upon as more valuable”.

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