Despite entering 2020 in a strong position, the ongoing pandemic, Black Lives Matter ad pause and recent social media brand boycott have packed a punch, leaving the social media giant Twitter winded, with advertising revenue down 23%.
Although ad revenues took a hit, Twitter reported that it saw growth in audience engagement, with its user base growing to 186 million, a 34% year-on-year increase.
Chief exec Jack Dorsey told investors that Twitter is looking at "multiple lines of revenues" is now in a place to "explore other ideas", hinting that subscriptions could be tested this year.
The Drum unpacks the social media group’s latest financials and how it aims to return to positive growth.
How has Covid-19 impacted Twitter?
Twitter has announced it experienced a difficult Q2, with total revenue down 19% year-on-year at $683m, admitting it continued to see headwinds from lower global advertising demand due to Covid-19 and civil unrest. A marked difference from April's revenue of $808m which had risen 2.6%.
Advertising revenues from April to June were down 23% compared to the year prior, at $562m. In the last three weeks of March, ad revenue was down 27% year-on-year. While April wasn't much better, Twitter did see a gradual improvement in May, until the Black Lives Matter protests caused a second hit. The company says ad revenue was down just 15% in the last three weeks of June.
Twitter reported that it saw growth in audience engagement with its user base growing to 186 million, a 34% increase. This was its highest reported growth rate.
How does Twitter plan to make up for lost ad revenue?
As it looks to recover, Twitter is hopeful that the return of sport will make an impact, both in terms of audience growth and "sponsorship and advertising content opportunities".
The company announced it had finished work rebuilding its ad server Mobile Application Promotion (MAP) which should allow Twitter to better target and monetize ads.
Twitter said it was thinking of ways to diversify its revenue away from advertising by launching a subscription product.
"We have focused our attention on increasing revenue durability so that we have multiple lines of revenue to pull from. We want to make sure any new line of revenue is complementary to our advertising business. So we do think there is a world where subscription can be complimentary," Dorsey admitted.
What do Twitter's ad revenues tell us about the wider state of the industry?
The second major social media company to report on its earnings, Twitter follows Snapchat parent Snap, which said its advertising sales had rebounded in July following a tough second quarter. Facebook and Pinterest are to report next week.
Advertisers pulling spend from Facebook has caused some to rethink social media altogether. In June, consumer giant Unilever said it was halting ad spend on Facebook, Instagram and, Twitter through the end of the year. As Twitter looks to reclaim ad revenue lost as a result of the pandemic and Black Lives Matter protests, it could have a bigger issue on its hands.