Report: Twitter plans major retool of its ad business

Dive Brief:

  • Citing several unnamed sources, TechCrunch reports that Twitter is seriously reevaluating three core areas of its ad business: direct response campaigns, Promoted Tweets and TellApart, an ad tech platform focused on personalization that Twitter acquired in 2015. Twitter has a new goal of making its service more streamlined and intuitive for brands.
  • TechCrunch suggested that, if these three products don’t start to see big buys, Twitter may halt support for them. "2017 will be about simplifying and differentiating our revenue products. It’ll take time for all the results we want to see," CEO and co-founder Jack Dorsey noted on a recent earnings call. Twitter did not provide comment to TechCrunch.
  • Twitter’s Q4 earnings, released last week, were its worst yet, showing a drop in ad revenue. The company recently fired 9% of its staff, sold off major tech properties like Fabric to Google and trimmed video-looping app Vine.

Dive Insight:

Twitter’s made much of reinventing itself since co-founder Dorsey signed back on as CEO in 2015 but the platform has only recently begun to actually shed products, including lead generation campaigns, which it powered down at the beginning of the month.

The lead generation news first surfaced late last year and was to be expected, but the further trimming of its direct response business and Promoted Tweets, in particular, signal that Twitter is dramatically putting the pedal down on strategy reevaluation after other cost-cutting efforts failed to bolster profitability.

While Twitter has struggled to grow in any significant way in recent years, its Q4 earnings were especially grim — revenues declined for the first time since the company went public, according to Ad Age — which may be spurring the micro-blogging site to take more dramatic steps in stripping down old parts. 

Promoted Tweets have been a staple of Twitter advertising since it began to serve ads but nearly one-third of brands today don’t actually put any ad budget toward Twitter at all. Twitter is obviously looking to convince brands to make bigger buys here, with video and more robust multimedia offerings serving as the linchpin of that push, per TechCrunch. 

Twitter wouldn’t be alone in adjusting ad strategy to put a greater emphasis on video. Facebook has recently suggested that digital ad real estate on News Feed will be completely taken up in the next few years, with video rising as a new way to attract fresh ad dollars. Facebook is reportedly investing in a set-top box app and is also promoting a heavy marketing campaign around Live video, which serves as a competitor to Twitter's streaming offerings.  

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