Twitter talks up its adtech offering, as revenues decline plus it admits to miscounting user numbers

However, with an increased focus on efficiency, and the continued diversification of its revenue stream, Twitter’s leadership forecasts that the final quarter of 2017 “will likely be GAAP profitable” – an outcome that would represent its first profitable reporting period – with the outfit disclosing that revenue for the third quarter came in at $590m.

Advertisers contributed $503m to this sum – representing an 8% year-on-year decline – although Twitter’s leadership is keen to highlight how its data licensing revenue for the quarter increased 22% year-on-year to hit $87m, as part of its ongoing “revenue diversification” drive.

The decrease in advertising revenue also came at a time when its DAU-count increased 14% year-on-year with Twitter also reporting that adjustments to how it calculates its monthly active user (MAU) base during the period leading to a 14% increase during the period, with this number now standing at 330m.

This recalculation is due to the company historically including users that had been logging in to Twitter via third-party applications, which the social network had then mistakenly added to its total MAU-base – an issue that had led to its overestimating this number by as much as one-to-two million users.

Despite reporting a 99% annual increase in ad engagements, plus “improved sales execution with strength across video and direct response ad formats”, the social network’s cost per engagement decreased by 54% year-on-year during the period.

Speaking to financial analysts on its quarterly earnings call Twitter’s leadership, highlighted efforts to drive both user growth, diversify its revenues streams, in particular with regards to its data licensing offering, as well as experimentations with a new programmatic ad offering.

Anthony Noto, Twitter’s chief operating officer, added: “Our top 100 advertisers globally in the quarter were up 23% year-over-year, so as you peel the onion a few layers, you start to see growth that will start to surface itself.

“Our data enterprise solutions business accelerated for the third consecutive quarter on a year-over-year basis, so we’re very optimistic about the growth opportunities we have with that product category.”

To improve profitability Twitter is also promoting its self-serve advertising platform due to the high profit margins associated plus its potential to bolster its overall number of advertisers.

Also included in its recent advertiser charm offensive was the establishment of an “advertiser success team,” a band of executives dedicated to servicing Twitter’s top 5% of advertisers.

Noto later went on to say: “We’ve made investments in a new subscription product, that for $99 you don’t have to pick what ad formats you want to use on Twitter; we do all that for you… It’s early, and we’re testing but the initial signs are promising.”

This builds on a promise made by Twitter chief Jack Dorsey to improve the admittedly “complicated” process of placing ads on the social network, with the cofounder of the company adding that product updates, such as the Explore Tab, helped improve engagement with consumers.

“We’re playing a lot with better matching people with their interests and topics that they care about. This is an area of experimentation that we’re exploring to figure out the right approach,” he added.

Earlier in the year Dorsey had spoke of the company’s plans to “double down” on adtech investment with the outfit drafting in a host of talent (such as ex-Turn chief executive Bruce Falck) to aid this drive.

Under questioning from financial analysts, its leadership outlined some of its efforts in this space, including a “very, very early test” with a real-time bidding (RTB) offering to “tap into new channels of demand outside of video and social.”

Noto added: “We think there’s a real opportunity to tap into premium display budgets – we do not really tap into those budgets today – we think our RTB product could be very competitive against premium display from a demand perspective.”

Twitter is currently in negations with a host of demand-side platforms (DSPs) to bolster demand for this nascent programmatic offering Noto told listeners on the call. This could potentially enable it to monetize inventory for users that are not logged-in to the social network, although Noto hastened to remind listeners on the call that this is an early stage offering, and no material impact on its earnings report should be expected any time soon.

“We have some inventory that is not being sold, we’re in a demand-constrained environment – not a supply-constrained environment – so we think we can tap into this third-party demand throughout programmatic RTB,” he added.

Discussing its emergent data licensing efforts, Noto also went on to describe how Twitter wants to work fewer partners in a strategy that would see it work with less brands thst will (ideally) spend more with the social network as it improves the user insights it can offer them.