Twitter's Revenue Problems Stem from Over-Expensive Ads

Twitter having problems is hardly new. It's been going on for a long while by this point and we all know about it, but now Twitter has made it clear where they think their ad revenue problems come from.

Essentially Twitter has pointed out that competition for ads has increased. With Snapchat and Instagram now selling ads for less than Twitter themselves offer, companies are less likely to look at Twitter. Most adverts on the site are images so why advertise on there when you can share your video and image adverts on services that are dedicated to such media?  As well as this, Twitter's ads are still charged at a premium which basically means that they're too expensive for most companies to buy. For companies with a lot of money, this won't be a problem, but they aren't likely to want to advertise on a service that is regularly losing users. This could be a real problem as they start to stream more. They might be getting some money from these deals with the various sports leagues but to keep those going they'll need to be able to sell new advertising space as well.

What Twitter is doing is trying to convince businesses that their ads are worth what they cost. Essentially what Twitter charges for is engagement. If someone clicks on your link, then they'll get some money, if a bunch of people re-tweet it they'll get even more money. For most businesses, this is an expense they can't afford. Twitter wants businesses to realise that it actually is worth it as this way of advertising is different than any other form of social media advertising. The problem is that Twitter gets most of the revenue they generate from mobile advertising, 89% of it in fact. It's difficult to track mobile advertising so Twitter isn't getting as much money as they'd like. They need to work out some way to prove that the mobile advertising actually works.

For now all Twitter can do is promise that the premium costs are worth it. If you want advertisement with user engagement, then Twitter is still the place to get it.

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