Is Twitter Advertising Coming of Age?

Twitter’s ad revenue, which makes up 86% of its total revenue, has been increasing steadily in recent months. If this trend continues, marketers who have been reluctant to dedicate social media ad spend to the platform may soon change their minds.

In the fourth quarter of 2018, year-on-year ad growth was strong: Ad revenue rose 23% to $791 million, ad engagements were up 33% and cost-per-engagement dropped 7% on the social media network.

And all of those positive signs have continued into this year: Q1 2019 ad revenues jumped 18% to $679 million, ad engagements increased 23% year-on-year, and cost-per-engagement dipped 4%.

These encouraging numbers come as the company has been striving to improve brand safetyOpens a new window on its platform by limiting abuse, removing spam and discounting fake users and duplicate users from its reporting.

Clearly Twitter is enjoying some degree of success for its efforts. As it posts consistent figures showing that ad engagement is up and cost-per-engagement is down, the Twitter marketplace is becoming more attractive to advertisers looking for high return on spend.

Twitter swaps user metrics

Despite the impressive ad revenue growth in large part due to this focus on improving the health of the platformOpens a new window , Twitter’s global monthly active users (MAUs) have been declining steadily in recent years as it purges fake accounts, bots and abusers.

Indeed, Twitter has stated that “metrics may be impacted by our information quality efforts, which are our overall efforts to reduce malicious activity on the service, inclusive of spam, malicious automation, and fake accounts.”

I imagine it’s hardly a coincidence, then, that Twitter announced a few months ago that it will no longer be reporting its MAUsOpens a new window and will instead focus on a new metric dubbed “monetizable daily active users” (mDAU), which measures how many Twitter users who visit the platform on a daily basis are seeing ads.

What a surprise that this new metric paints a much better picture for Twitter’s user count: Whereas MAUs dropped 2% year-on-year this past quarter, mDAUs jumped 12%.

What this means for marketers

Like so much of life, what this actually means depends on how you look at it.

If you’re a proponent of the shift in user measurement, this is a positive move. As Jasmine Enberg, senior analyst at eMarketer, put it, “Twitter’s decision to share only monetisable daily active users going forward is in keeping with its value proposition to advertisers – a committed though not very large user base when compared with other social platforms.”

From that perspective, mDAUs offer a more accurate metric for marketers to measure campaigns and understand the Twitter user base.

Enberg also points out that despite stagnant user growth in the US, Twitter’s “Q1 2019 revenue growth beat out expectations, with most of the growth coming from the US…That proves once again that Twitter is able to grow its revenue without significantly growing its user base.”

On the other hand, many experts have argued that this swap in user metrics is just a play by Twitter to make its user numbers look better.

And the fact that mDAU is a metric invented by Twitter – for Twitter – would strengthen such an assertion. By the company’s own admission, mDAU “is not based on any standardized industry methodology and is not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies.”

Although the social media network has been trying to clean up its platform, critics say that it’s still riddled with issues. Forrester senior analyst Jessica Liu argues, “… small product tweaks like hiding comments or continuing to rely on users to self-report/police won’t change the social network dramatically.”

From that stance, the new metric is just a way to pull the wool over marketers’ eyes and convince them to invest in Twitter ads even though the platform still hasn’t managed to prove that it can maintain a healthy environment for users – and ensure a brand safe marketing environment for advertisers.

For Twitter, this is all part of its ambition to improve the user experience and keep its users more engaged, which, in turn, will make the social media network that much more attractive to marketers.

For now, this strategy seems to be working as the company turned its sixth profitable quarter in a rowOpens a new window .

And if Twitter can prove to marketers that it can ensure a brand-safe environment that offers them the ability to reach new audiences across the globe, advertisers will no doubt start investing more in the platform – especially if it can continue to improve ad engagements and keep cost-per-engagement down.