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July 27, 2016

Lack of Advertising, Sluggish User Growth Continue to Plague Twitter

Twitter is having a hard time attracting advertising dollars.

The social networking firm admitted in its second quarter results report that it is not getting a big enough slice of advertisers’ dollars — and shares dropped more than 11 percent in after-hours trading as a result.

Jack Dorsey

Jack Dorsey

“First, there is increased competition for social marketing budgets,” Twitter said in a letter to shareholders. “We’re still priced at a premium CPE [cost per engagement] relative to others.”

In other words, platforms like Facebook and Instagram are attracting marketers’ advertising dollars because they have more users and cost less.

Twitter recorded revenue of $602 million for the second quarter, an increase of 20 percent year-over-year, but still fell short of Wall Street’s estimate of $606.8 million.

Despite revenue coming in at the midpoint of the company’s forecasted range of $590 to $610 million, it was still the slowest revenue growth quarter-to-quarter since Twitter went public in November 2013.

User growth — or the lack of it — also continues to be a drag on the microblogging site. Twitter reported an unimpressive one percent rise in the number of monthly active users in the second quarter from 310 million to 313 million.

CEO Jack Dorsey, however, was positive during his call with investors.

“We continue to see steady growth in both audience and engagement. What makes our audience growth this quarter notable is we can see directly the link between the product changes we made and our growth,” he said. “We’re making the right decisions in our products, and it gives us a foundation for future growth. We’re working every day to make Twitter faster, more intuitive, and easier to use. You’ve already seen us take some big steps here, like the changes to the timeline, and the announced changes to the character account and reply rules. And there’s more changes like these on the way.”

Twitter is estimating its third quarter revenue to come in between $590 million and $610 million.


Jennifer Cowan is the Managing Editor for SiteProNews.