Twitter is still no entirely sure how to best attract advertisers. The decline in ad revenue from $641 million in 2015 to $638 million in 2016, reported last week is just one sign of an ad business in despair.
According to sources close to the company, TechCrunch reports that the company is now shuffling to refocus its business and align it more closely with its strengths. In recent months, Twitter has become a place to discover the latest news content before it even breaks on a publisher’s site. That’s why the company wants to make some change to its direct response activities, Promoted Tweets as well as its TellApart business, which it acquired for $532 million in 2015.
As part of a wider plan to reshuffle its advertising business, the firm will be concentrating on products that drive revenue and stop support for those that do not. 2017 is all about simplification for Twitter.
One problem Twitter faces is speed. It’s built to discover things faster and hence users have largely become accustomed to skipping ads. One of the sources said:
“People would ask internally, ‘what is Twitter good for?’ and you would get 1,000 answers. The approach was to let 1,000 flowers bloom, but if products are hard to use I don’t even know where to start with what to use it for. Picking news and talk, that simplification has driven some clarity. Now they are trying to drive the same kind of clarity with the monetization products.”
However, live videos have been performing well across the app. Potentially, these could be expanded to include adverts and discussions.
Anthony Noto, COO, Twitter, previously said that the company’s direct response products had performed to scale and Twitter was continuing investment in these products.
“[But] in the shareholder letter we talked about some of the direct response products that are challenged. We’re going to reevaluate whether we can be competitive in those products, or if we’re better off reallocating those resources to products that are doing really well or new areas of innovation that are more organic and more unique and differentiated to Twitter and that drive really strong engagement. And so that’s the philosophy.”
Meanwhile, TellApart appears to be a business in decline. Though not confirmed, the company may take a step back from the customer data platform.
It seems that Twitter has finally reached a point where it can confidently sift through its products and keep ad features that are profitable – only. In turn, this should help the social media company to streamline its monetisation for improved advertising functions.