By Adam Fraser
Twitter has delivered its Q1 2017 results, and there are green shoots of hope for the first time in some time.
Whilst the financial results remain weak, most significantly user numbers shifted upwards by 9m users for quarter, faster growth than Twitter has seen for some time. The market liked what it saw, pushing the shares 10% higher as a result.
If you want to dive into all of the detail, you can check the financials, investor presentation, shareholder letter and investor conference call. If you want the key highlights here are 10 key takeaways:
- Monthly active user (MAU) numbers grew to 328m from v 319m last quarter (up 3.1%) and 310m a year ago (6.1% growth); this is the fastest total quarterly user growth Twitter has delivered since Q4 2015.
- 21% of Twitter’s MAUs (70m) are based in the USA; this is an increase from 67m in the prior quarter, noting most of the user growth is coming internationally.
- Attempts to drive greater engagement and more regular usage on the platform are working (constant tweaks to the algorithm which determines what you see in the timeline may not be popular but they seem to be effective), with Daily Active Users growing at 14% on prior year v 11% last quarter and 7% in Q3 (interestingly the company does not reveal the absolute number of DAUs).
- Total ad engagements increased 139% year-over-year, driven by a continuing mix shift toward video ad impressions and higher video view rates from product improvements such as video quality optimization and latency improvement.
- Historically, a significant Achilles heel for Twitter has been trolls and abuse on the platform. The company noted it had made meaningful progress toward identifying and removing accounts that demonstrate abusive behavior and, as a result, Twitter is seeing less abuse reported across the service. Important.
- Revenue at $554m was 22% down on the prior quarter of US$717m and, more significantly, 7% lower than a year ago when ad revenue was $595m. Notwithstanding the better user numbers, this absolute decline in revenue is a real concern.
- The breakdown of revenue for the quarter showed 86% of revenue coming from advertising and 14% (versus 11% in the prior quarter) coming from data licensing/other (the ‘big data’ aspect has huge potential for Twitter).
- Twitter made a loss of US62m for the quarter but also discloses “adjusted EBITDA which showed a profit of US$170m after adjusting for stock based compensation, depreciation and amortisation Twitter ended the quarter with US$3.9bn in cash so despite the regular “Twitter is dying” headlines we see, the business is solidly funded.
- In Q1 Twitter streamed more than 800 hours of live premium video from content partners across more than 450 events reaching 45 million unique viewers, an increase of 31% from Q4’16 (the first full quarter of live streaming premium content). Of these hours, 51% were sports, 35% were news and politics, and 14% were entertainment. Twitter is making a big bet on live streaming.
- Notwithstanding the encouraging user growth, Twitter informed the market it expects advertising revenue growth to continue to meaningfully lag that of audience growth in 2017, including in Q2.
“We’re proud to report accelerating growth in daily active usage for the fourth consecutive quarter, up 14% year-over-year,” said Jack Dorsey, Twitter’s CEO. “We’re delivering on our goal to build a service that people love to use, every day, and we’re encouraged by the audience growth momentum we saw in the first quarter. While we continue to face revenue headwinds, we believe that executing on our plan and growing our audience should result in positive revenue growth over the long term.”
There is no question that Jack has had a positive impact since returning as CEO, delivering a tighter strategy and a more communicative approach to market updates. User growth is undoubtedly encouraging, but there is no denying the importance of large, continuing quarterly losses. Whether Twitter can convert its undoubted public utility and societal importance into a viable profitable business remains to be seen.
By Adam Fraser
I have written a number of blog posts recently on brand content appearing next to highly distasteful and inappropriate content on digital platforms, the ensuing YouTube ban and a potential swing to traditional (human curated) media buying.
I came across a blog post from ClueTrain manifesto author and global thought leader in digital transformation Doc Searles. Appearing in the Harvard Business Review, it’s a long form piece of content which methodically (and quite brilliantly) steps through the underlying causes of the current problems in Adtech.
Spoiler alert for where his thinking takes him – the title of the article is “Brands need to fire adtech”.
Highly recommended reading on a critical topic facing the whole advertising sector. This issue is not going away and tracking based advertising is going to increasingly come under the regulatory microscope.
By Adam Fraser
The promise of digital was increased transparency and measurement, and a heightened ability to target the right message at the right time to the right person.
In some cases, the promise has been delivered – primarily via Facebook hyper targeted ads and SEO powered Google ads appearing alongside precisely targeted search terms.
However programmatic and the long tail of broader digital ad spend are coming under heightened scrutiny, and rightly so in the face of brand messaging appearing alongside highly inappropriate content. An advertiser YouTube ban remains in full swing.
Brand response is coming in many forms. US bank JP Morgan Chase lowered the number of sites it advertises on from 400,000 to just 5,000. Interestingly it noted very little impact in terms of cost and overall performance – an astonishing outcome.
Chase had unintentionally shone a light on the effectiveness of ads in the long tail, the nooks and crannies of the web, and the results were not favourable for ad networks powered by automation and AI driven ad tech.
The agencies are also responding. Omnicom – one of the worlds largest agency holding companies – is introducing human review across thousands of YouTube videos to ensure brand safety for their clients’ media buys.
Looming in the background is the landmark speech from one of the worlds biggest advertisers, the CMO of P&G, threatening to pull digital spend if transparency didn’t improve.
The business world often works in cycles – are we about to shift back to a marketing world with an increased emphasis on human curated traditional media buying, even across digital platforms?
As the risks of digital brand safety become more apparent I would suspect so.
By Adam Fraser
Interesting times for the big guns in the digital media world.
As we entered 2017, Google and Facebook were increasingly dominant to the point of being labeled a duopoly in terms of digital advertising market share. It seemed they were untouchable.
Suddenly a few bumps are appearing in the road.
Google is in the midst of an advertiser backlash, as brands push back on their ads appearing alongside extremely distasteful content.
Suddenly the risks of programmatic and algorithmic decision making are becoming all too clear to brands – the low cost and ease of process comes with a lack of control and high brand risk that your ad may appear alongside inappropriate context.
Then one of the world’s biggest spenders, the CMO of Proctor and Gamble, sets an open measurement challenge to the big digital “walled gardens” – show us the metrics or we will pull our ads.
An industry-standard audience measurement by year end for the digital universe is a big goal, but if the major platforms don’t play ball, the risks of advertiser backlash grows.
As with the major colonial empires in history, is it at the peak of your powers that a dominant force becomes complacent and vulnerable? It’s always hard to see at the time, but perhaps the first signs of some very faint cracks are appearing for Google and Facebook.
The transparency and measurement issues for the digital publishing sector are certainly not going away.
By Adam Fraser
I was proud to hit a podcast milestone this week as Episode 100 of my podcast “We’re Talking Social and Digital” with Jay Baer hit iTunes. Quite a journey all round, and I remain a passionate podcast listener as well as producer.
So I wasn’t surprised to see a leading industry report in the area of audio content trends, The Infinite Dial from Edison Research confirm that the growth in podcasting as a medium has continued in the past year.
Whilst the report is US centric (based on interviews with 2,000 Americans between Jan and Feb 2017), this is very often reflective (with a time lag) of consumer trends around the globe, and it is an extremely credible report which dates back as far as 1998.
The key trends from the report were:
- 81% of the population over the age of 12 now own a smart phone
- 58% have a subscription to a premium streaming TV service (Netflix, Hulu etc)
- 61% listened to online radio (radio online or streaming audio only available on the internet) in the last month
- The top 3 audio brands were Pandora, iHeartRadio and Spotify
- 81% of the population over the age of 12 are actively using social media
- The top 3 social media brands in terms of awareness are Facebook (95%), Twitter (90%) and Instagram (88%). Note Snapchat is growing rapidly hitting 82% this year v 71% last year
- Amongst 12-24 year olds Snapchat is the most popular social network
In terms of podcasting specifically:
- 60% were familiar with the term vs 55% a year ago
- 40% have listened to a podcast v 36% a year ago
- 24% had listened to a podcast in the last month v 21% a year ago
- 15% listen to a podcast weekly v 13% a year ago
- Weekly podcast listeners listen to an average of 5 podcasts per week
- 65% of podcast listeners use a mobile device (phone, tablet) to consume the audio
- 19% of car users have listened to a podcast while driving.
The report is packed with other interesting data insights and I recommend you have a browse.
The growth in podcasting reflects the on demand economy we know live in – consumers are putting together the precise audio content they desire, and listening on a device of their choice at a time that suits. It’s hard to argue this is not a superior product to scheduled, broadcast radio. With this product advantage tied to the potential upside from connected cars, I would expect podcasting’s growth to continue for some time.
By Adam Fraser
The latest CMO Survey has been released and the findings are both interesting and somewhat contradictory, highlighting the ‘deer in the headlights’ flux many marketers feel when it comes to data analytics and technology platforms.
This bi-annual survey is well respected and is the longest-running survey dedicated to understanding the field of marketing. The latest edition received responses from 388 top marketing executives.
The key finding showed spending on marketing analytics (quantitative data about customer behavior and marketplace activities) is expected to grow from 4.6% to 22% of marketing budgets in the next 3 years. Yet notwithstanding this material increase, marketers say barely a third of available data is used to drive actual decision making in their companies.
Interesting contradiction. The survey participants intend to increase spend by almost 400% on something which 2/3 of the time isn’t driving business decision making. Marketers seem to be saying “we know we need data and should be using data, but don’t have access to the right data when it matters”.
The report explores in some detail why marketers are not utilisng data analytics in decision making, the top 3 drivers being:
- Lack of processes/tools to measure success through analytics
- Lack of people who can connect marketing practice to marketing analytics
- Data not highly relevant to the decision at hand.
Marketing will always be a blend between art and science, something I have often discussed on my marketing podcast. Gut feel versus hard data. Both matter.
The survey shows that marketers still need to up their game in effectively utilising technology platforms and data analytics to increase their depth of consumer insight, drive their strategy and monitor the execution.
We can argue about the appropriate balance between art and science in marketing in 2017, but taking a mature, professional and structured approached to technology and analytics as part of your marketing operations is no longer an optional extra.
By Adam Fraser
The Edelman Trust Barometer 2017 has been released by global PR leader Edelman. This annual report based on 33,000 surveys across 28 countries (now in its 17th year) is is a comprehensive survey of consumer attitudes to trust in government, business, not for profits and media.
The survey rightly garners significant attention as a credible, authoritative piece of thought leadership, and this year’s survey delivered some stark conclusions.
The intro to the report tells the story:
“The 2017 Edelman Trust Barometer reveals that trust is in crisis around the world. The general population’s trust in all four key institutions — business, government, NGOs, and media — has declined broadly, a phenomenon not reported since Edelman began tracking trust among this segment in 2012.”
Trust in crisis – heavy words; 2017 appears to have represented something of a tipping point for consumers as their trust in institutions of all kinds declines to crisis levels. This is the backdrop in which Brexit, the US election and the increased prominence of fake news took place.
Some of the key findings were:
- 2/3 of countries fell into ‘distruster’ territory with trust levels below 50%
- Only 37% of the population say CEOs are credible with 29% saying the same about government officials
- Media declined the most being distrusted in 82% of countries
- 85% of respondents lack full belief in the system
- 64% of the population find leaked information more credible than press releases
Perhaps explaining some of the underlying drivers, the survey also showed
- 53% believe the pace of change is too fast
- 50% believe globalisation is taking ys in the wrong direction
The report delivered plenty more insights showing just how bad the level of consumer trust in institutions is today.
Some tough messages for the media and marketing sectors alike.
Yet from this ‘scorched earth’ backdrop of consumer trust, opportunity beckons. Brands and publishers alike have the opportunity to consistently deliver on promises and build trust with an audience yearning trustworthy content and business actions.
For marketers the message is clear – tone down the advertising BS consumers are weary of, deliver on brand promises, stand for something beyond making money and listen to your customers (as well as giving them an opportunity to ask questions and provide input). It’s clearly time to change the game.
By Adam Fraser
As content marketing was in the prior periods, Influencer Marketing seems to have been anointed as the “next big thing” in recent months.
People may jump to the idea they need to engage major ‘stars’ like Kim Kardashian, Pewdie Pie or Taylor Swift in order to jump into Influencer Marketing.
However, a recent article from Venture Beat suggested that a more effective “bang for your buck” approach may be to target micro influencers. Defining micro influencers as anyone with a following of 10,000 – 1m followers, the article noted based on stats from a study from Markerly:
- Micro influencers are 4 times more likely than macro influencers to get a comment on a post
- Users with less than 1,000 followers get a comment 0.5% of the time versus 0.04% for those with 10m + followers
- Users with less than 1,000 followers gets likes 8% of the time versus 1.6% for those with 10m+ followers
The study concluded that accounts with followers of 10,000-100,000 represented the best combination of engagement and reach.
The conclusion may be unsettling for marketers used to the reach/frequency simplicity of mainstream broadcast TV communication. Developing effective relationships with a large number of influencers is not easy. This is trench warfare. Hard work which doest scale in the way media buyers would prefer.
There are also subtleties and nuances to influencer marketing based on trust and the necessary transparency required about what is sponsored which dont exist for conventional advertising programmes.
Influencer marketing is new terrain, and the value provided from insights back to a brands from influencers (ie listening), rather than merely broadcasting out via them, should not be under-estimated. Not a topic often discussed based on the almost hard wired “broadcast out” start point for most marketers.
The game is changing. And this makes for uncomfortable times for brands and agencies alike. Legacy behaviour and vested interests are strong, but disruption is alive and well within marketing.