- Twitter said in a note to investors Monday that it pulled its Q1 revenue outlook amid shrinking advertiser demand brought on by the coronavirus pandemic. It is the first major ad-supported platform in the U.S. to disclose the pandemic's impact on business, Reuters reported.
- Quarter-to-date, Twitter claims 164 million monetizable daily active users, up 23% from the year-ago period. Conversations around the coronavirus and the illness it causes, COVID-19, along with product updates are helping to drive activity, the note said.
- Yet, Twitter CFO Ned Segal said in a statement that the virus' global spread has significantly impacted revenue in recent weeks. Twitter will share further updates on an April 30 call with investors to discuss Q1 earnings.
People are flocking to social media platforms like Twitter during the pandemic, either as a distraction or to stay up-to-date on the latest developments in a fast-moving, global story. However, Twitter pulling its guidance for the quarter signals that marketers remain highly cautious during this period, a worrying sign for Twitter's peers in the tech space and the health of the digital advertising market they support.
The development points to a conundrum where publishers are receiving higher engagement from consumers interested in learning about the coronavirus, but not an accompanying boon to business. Facebook, for example, has seen an "unprecedented increase in the consumption of news articles" on its site due to the virus, according to an internal assessment reported in The New York Times. But Sheryl Sandberg, Facebook's COO, told Bloomberg TV recently that she doesn't expect business as usual to continue amid the coronavirus, and said the marketing industry is "certainly going to see a real impact," per Reuters.
Twitter has particular vulnerabilities that could be amplified with shrinking advertiser demand. Elliot Management, which recently acquired a large stake in the company, has set ambitious growth goals for Twitter CEO Jack Dorsey. As noted in Bloomberg, the hedge fund's targets would be hard for the executive to hit under normal circumstances, let alone during a pandemic. Elliott reportedly initially planned to replace Dorsey after acquiring a large stake in the company. Twitter last year also experienced considerable technical difficulties with its ad targeting products, which ate into revenue and led to an earnings miss in Q3.
It's clear that potential gains Twitter made in Q1 this year have been largely offset by the coronavirus disruption.
"Twitter had a strong start to the year before the effects of COVID-19 began spreading more broadly, including a successful Super Bowl and overall strength in the US," Segal said in a statement. "The COVID-19 impact began in Asia, and as it unfolded into a global pandemic, it has impacted Twitter's advertising revenue globally more significantly in the last few weeks."
The postponement of the Summer Olympics, an event that typically draws a lot of eyeballs and brands to social media, could cause another blow.
Yet, as the pandemic continues, more brands could return to spending Twitter with adjusted creative and media strategies that recognize the coronavirus. Fast-food chain Popeyes earlier this week launched a campaign that dished out its Netflix login details to Twitter users who posted selfies with its food. The effort was intended to occupy people going stir crazy during self-quarantine.