{"id":3484,"date":"2017-02-13T22:19:14","date_gmt":"2017-02-13T22:19:14","guid":{"rendered":"https:\/\/www.rsoftsolution.com\/blog\/twitter-plans-to-trim-down-its-ads-products.html"},"modified":"2017-02-13T22:19:14","modified_gmt":"2017-02-13T22:19:14","slug":"twitter-plans-to-trim-down-its-ads-products","status":"publish","type":"post","link":"https:\/\/www.rbsitsoftwaresolution.in\/blog\/twitter-plans-to-trim-down-its-ads-products.html","title":{"rendered":"Twitter plans to trim down its ads products"},"content":{"rendered":"

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Twitter continues to bleed cash and its advertising business has begun shrinking, so it\u2019s time for a change. Twitter will pare down three areas of its ad product, according to sources who spoke to TechCrunch.<\/p>\n

Twitter foreshadowed the shift during last week\u2019s\u00a0lackluster earnings report <\/a>that showed a year-over-year decline in Q4 ad revenue, from $641 million in 2015 to $638 million in 2016. Meanwhile it saw little\u00a0growth in monthly active users (currently 319 million, up 4 percent year-on-year). That added up to a $167 million loss last quarter.<\/p>\n

Together these facts\u00a0underscore a critical\u00a0issue for the company: It has yet to find the right formula for products that attract both users and revenues.<\/p>\n

But Twitter is trying to course-correct, and its solution is two-fold: it\u2019s redefined itself around a core mission \u2014 last week\u00a0described<\/a> as\u00a0\u201cthe best and fastest place to see what\u2019s happening in the world and what people are talking about,\u201d and, TechCrunch has learned, it\u2019s looking at ways of paring down its ad business to have more focus, too.<\/p>\n

Three areas that\u00a0Twitter is reassessing\u00a0include the company\u2019s direct response business, aspects of the Promoted Tweets products and the legacy TellApart business.<\/p>\n

Twitter\u00a0has not shuttered any of these yet, but\u00a0from what we understand, it\u00a0is now concentrating on what is driving more revenues. If there are products that are not getting significant buy-in from advertisers (say hundreds\u00a0of millions in revenue), Twitter wants to stop supporting them.<\/p>\n

Twitter declined to comment for this story. Though, as CEO Jack Dorsey forecasted on the earnings call, \u201c2017 will be about simplifying and differentiating our revenue products. It\u2019ll take time for all the results we want to see.\u201d<\/p>\n

What\u2019s holding Twitter back<\/h2>\n

The problem is this: Just as Twitter the consumer product was confusing to most new (and even some older) users, requiring too much work from people just to use it, Twitter the ad platform had become confusing too. It\u2019s overstuffed with options built up over time that no longer fit into the simplified mission that Twitter sees for itself. Advertisers were finding it too complicated, paralyzing their buying decisions.<\/p>\n

\"twitter-direct-response-ads\"<\/p>\n

Twitter\u2019s direct response Promoted Tweets blend into the feed and feel skippable<\/p>\n

Plus, several of these ad products don\u2019t feel memorable to users. The typical behavior on Twitter is to skim the timeline, in part because people expect some noise since the app only recently started algorithmically sorting its content. Twitter\u2019s interest graph differs from fully relevancy sorted feeds on networks filled with friends where you might be more inclined to read every post.<\/p>\n

This all makes it natural to skip over Promoted Tweets and direct response ads that blend into Twitter at a time when mobile advertisers are increasingly looking to momentarily dominate people\u2019s attention with full-screen video ads like on Snapchat and Instagram. Twitter\u2019s user growth slump may have made it hesitant to push more aggressive ad products.<\/p>\n

Now it\u2019s time to double-down on what works and trim the fat. This will be a significant shift in the company\u2019s strategy, after years of testing lots of different services and ad formats on the platform to see what took off, and thus leaving the question of focus open-ended.<\/p>\n

\u201cPeople would ask internally, \u2018what is Twitter good for?\u2019 and you would\u00a0get 1,000 answers,\u201d said a source close to the company who requested to remain anonymous. \u201cThe approach was to let 1,000 flowers bloom, but if products are hard to use I don\u2019t even know where to start with what to use it for<\/em>. Picking news and talk, that simplification has driven some clarity. Now they\u00a0are trying to drive the same kind of clarity with the monetization products.\u201d <\/span><\/p>\n

Likely to stay are products that can support how Twitter wants to position itself in its latest bid to grow: specifically video and other ad formats that support its more vivid new media efforts.<\/span><\/p>\n

Aerodynamics<\/h2>\n

If you look at Twitter\u2019s earnings last week, you could also see some of the writing on the wall.<\/p>\n

Promoted Tweets \u2014 essentially Twitter\u2019s first ad product from\u00a0back in 2010<\/a> \u2014 were mentioned three times in the shareholder\u2019s letter<\/a>, and direct response ads \u2014 first launched in 2013<\/a>\u00a0\u2014 five times; all in the context of declining revenues that \u201cmuted\u201d increases in newer\u00a0areas like video. (Direct response has been a lagging business<\/a> for a while, it seems.)<\/p>\n

Twitter\u2019s best hope for the future is to combine the first and second screen, becoming both where you watch video of big zeitgeist events and<\/em> where you discuss them. That content can be monetized with lucrative video ads, but Twitter needs to free up resources to expand their traction.<\/p>\n

Anthony Noto, Twitter\u2019s COO, gave some insight into the state\u00a0of its ads business during the earnings presentation:<\/p>\n

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\u201cWe\u2019ve . . .\u00a0had success in some of our direct response products that have achieved significant scale, and we\u2019ll continue to invest in those.\u00a0[But] in\u00a0the shareholder letter we talked about some of the direct response products that are challenged. We\u2019re going to reevaluate whether we can be competitive in those products, or if we\u2019re 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\u2019s the philosophy.<\/p>\n<\/blockquote>\n

Meanwhile, TellApart was\u00a0a big acquisition for Twitter \u2014 it\u00a0acquired<\/a>\u00a0the adtech startup for $532 million<\/a> in 2015 \u2014 giving the social media platform the infrastructure to better target ads to potential customers. It sat within Twitter\u2019s strategy to build out its direct response business. Yet during earnings, it was only mentioned briefly, and as a business in decline.<\/p>\n

\"twitter-video-chase2\"<\/p>\n

\u201cSignificant gains in revenue from the Twitter Audience Platform were offset by significant year-over-year declines in revenue from TellApart,\u201d the company wrote in its shareholder letter. \u201cWe expect contributions from non-owned-and-operated advertising revenue to face significant headwinds in 2017 from factors impacting TellApart.\u201d<\/p>\n

To note, some of the original TellApart tech \u2014 which identified viewers and served them personalized ads \u2014 plus more created by the TellApart team, runs across other parts of Twitter\u2019s business that are\u00a0doing well and will remain. Co-founder Josh McFarland rose to\u00a0become Twitter\u2019s VP of Product, overseeing a number of ad initiatives. But in another blow to its strategy, he\u2019ll be leaving<\/a>\u00a0at the end of the month to join the VC firm Greylock.<\/p>\n

On TellApart, Noto said:<\/p>\n

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\u201cWe are taking a step back and looking to simplify our product and putting our resources behind those products that we think have the greatest probability of success, that can deliver the best long-term growth potential, and that frankly leverage our competitive advantages in a unique way. That may cause us to deemphasize some products that are producing revenue in addition to decisions that we\u2019ve already made as it relates to . . . TellApart.\u201d<\/p>\n<\/blockquote>\n

It\u2019s unclear if that de-emphasis will mean reassigning team members, layoffs, cancelling products or putting them up for sale to another business.<\/p>\n

\"tellapart-news-1\"<\/p>\n

Former TellApart CEO and Twitter VP of Product Josh McFarland is leaving to become a VC with Greylock<\/p>\n

Twitter is no stranger to shutting down or selling off things that are not working for it, especially recently. The last few\u00a0months alone have seen it sell off its app development\u00a0platform Fabric to Google<\/a>\u00a0and\u00a0announce the closure and then\u00a0eventual transition of Vine<\/a> to a pared-down service. On the monetization front, it\u2019s already removed the Buy button<\/a>\u00a0and downshifted the whole Commerce operation; and shuttered its lead generation product<\/a>.<\/p>\n

Noto made it\u00a0sound like Twitter will be including some of its more experimental ad tests in that cull, as well:<\/p>\n

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\u201cWe\u2019ve made some investment decisions in some direct\u00a0products that have not come to market that have had significant resources allocated to them, that haven\u2019t gotten to the point that we could launch them, and we need to rethink about those resources and that level of investment and whether we should reallocate it.\u201d<\/p>\n<\/blockquote>\n

While these changes can be painful for employees and users alike, they\u2019re what\u2019s necessary to get Twitter in flying shape again. The company\u2019s core consumer product remains indispensable for legions of journalists and readers, celebrities and fans. By streamlining its monetization, Twitter will be able prioritize serving ads as memorable as the news it breaks.<\/p>\n

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\t\t\tFeatured Image: Bryce Durbin\/TechCrunch<\/small><\/p>\n

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