By Adam Fraser
Twitter has delivered its Q4 results, as always eagerly awaited and much analysed.
The key user trends are creeping up but overall the best you can probably say is that they have at least arrested their decline. Far too early to call a turnaround for a business that has never made a profit, The stock market remained unimpressed. The business has substantial cash in the bank but at some point needs to work out how to turn a profit.
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 slightly to 319m from v 317m last quarter (up 0.8%) and 306m a year ago (4.6% growth); the steady growth is encouraging but the pace remains insignificant compared to other social networks – Facebook continues to grow in the tens of millions while Twitter crawls in single digits
- 21% of Twitter’s MAUs (67m) are based in the USA; user numbers in the USA are broadly flat with the user growth coming internationally
- Attempts to drive greater engagement and more regular usage on the platform are working, with Daily Active Users growing at 11% on prior year v 7% last quarter and 5% in Q2
- Mobile MAUs were 83% of users, indicating Twitter sits in between Facebook ( 90%+ mobile users) and LinkedIn (approx 60% mobile users) for mobile penetration; note mobile products drove 89% of total ad revenue
- Revenue at $717m was 16% up on the prior quarter of US$616m and 1% higher than a year ago; ad revenue actually declined on a year ago, with data licensing income increasing
- The breakdown of revenue for the quarter was broadly consistent with recent periods, with 89% of revenue coming from advertising and 11% coming from data licensing/other (the ‘big data’ aspect has huge potential for Twitter). Video ads are the most popular and effective form of ads on the platform
- Tweet impressions and time spent on Twitter remained strong, each increasing by double digits on a year-over-year basis in the fourth quarter.
- Twitter made a loss of US$167m for the quarter but also discloses “adjusted EBITDA which showed a profit of US$215m after adjusting for stock based compensation, depreciation and amortisation Twitter ended the quarter with US$3.8bn in cash.
- In the fourth quarter, Twitter streamed more than 600 hours of live premium video from content partners across roughly 400 events, attracting 31 million unique viewers in its first full quarter of operations. Of these hours, 52% were sports, 38% were news and politics, and 10% were entertainment.
- The key strategic areas of focus in 2017 were identified as product changes to make Twitter safer, investing in core use case and product areas such as live streaming video, among others, simplifying and differentiating revenue products to drive sustainable long-term revenue growth and focusing on making progress toward GAAP profitability.
“2016 was a transformative year as we reset and focused on why people use Twitter: it’s the fastest way to see what’s happening and what everyone’s talking about,” said Jack Dorsey, Twitter’s CEO.
There is no question Jack as CEO has had a positive impact on the Twitter business. The shareholder letter shows a greater willingness towards transparency and the strategic focus is undoubtedly tighter. But Twitter was asleep at the wheel for some time as newer platforms such as Instagram and Snapchat stole its thunder. It still seems to be a great business utility seeking a sustainable commercial business model, and remains vulnerable to takeover at current stock market pricing.
By Adam Fraser
Another year in the fast moving world of social media and digital marketing is coming to a close.
The pace of change is relentless. The social platforms are constantly changing and the media landscape continues to fragment and self disrupt at pace.
Blogging and podcasting weekly is challenging from a consistency and delivery point of view, but in this environment the topics to discuss are never in short supply.
A few blog posts and podcasts for you to review over the holiday season if you want to ponder the broader trends we have seen in 2016….
We saw Maccas in the USA dump their ad agency of decades and introduce a new incentive driven (and zero margin) business model for the incoming agency partner. Facebook continued to smash their results out the park, Twitter went sideways and LinkedIn got hoovered up by Microsoft. CMO spend on tech is now approaching that of the CIO, and podcasting continues to go from strength to strength. Vine is being sold off by Twitter and Blab and Google Hangouts shut down.
Podcast wise, I had so many great guests on it is hard to select a few highlights, but for variety if you missed any of these, you may want to check out global guests such as Robert Rose talking the state of advertising, Joe Pulizzi talking conferences and Scott Monty talking influencer marketing. Close to home, ex head of digital at Telstra Gerd Schenkel talked digital transformation, Clive Dickens talked the media landscape and Oliver Weidlich talking mobile user experience.
Finally I wanted to thank you for your interest in the EchoJunction blog and podcast. I hope you find it valuable and look forward to continue brining you both in 2017. Your attention and support is never taken for granted.
Excellent interview; thanks @johnsmibert and Adam Fraser! Business strategy should drive social strategies! http://buff.ly/2eZ44x5
— Tamara Schenk (@tamaraschenk) November 2, 2016
By Adam Fraser
Twitter has released its Q3 2016 results to the stock market.
Nothing spectacular but a solid set of results, with moderate growth in revenue and users, and an announcement around job cuts to drive better future financial performance. The stock market liked what it saw with shares increasing around 5% when the results were announced.
If you want to dive into all of the detail, you can check the financials, investor presentation (also broadcast via Periscope!), shareholder letter and investor conference call. If you want the key highlights here are 10 key takeaways:
- Monthly active user (MAU) numbers grew slightly to 317m from v 313m last quarter (up 1.3%) and 307m a year ago (3.3% growth); the steady growth is encouraging but the pace remains insignificant compared to other social networks – Facebook continues to grow in the tens of millions while Twitter crawls in single digits
- 21% of Twitter’s MAUs (67m) are based in the USA; user numbers in the USA are broadly flat with most of the growth coming internationally
- Attempts to drive greater engagement and more regular usage on the platform are working, with Daily Active Users growing at 7% on prior year v 5% last quarter and 3% in Q1
- Mobile MAUs were 83% of users, indicating Twitter sits in between Facebook ( 90%+ mobile users) and LinkedIn (approx 60% mobile users) for mobile penetration
- Revenue at $616m was 2.3% up on the prior quarter of US$710m and 8.3% higher than a year ago; this exceeded market expectations and the shareholder letter detailed a number of areas where the ad platform was working better
- The breakdown of revenue for the quarter was broadly consistent with recent periods, with just under 90% of revenue coming from advertising and circa 10% coming from data licensing/other (the ‘big data’ aspect has huge potential for Twitter). Video ads are the most popular and effective form of ads on the platform
- Total ad engagements grew 91% year-over-year
- Twitter made a loss of US$103m for the quarter but also discloses “adjusted EBITDA” which showed a profit of US$181m after adjusting for stock based compensation, depreciation and amortisation. Twitter ended the quarter with US$3.6bn in cash.
- Live streaming video represents a key strategic growth area for the business; audience numbers for Thursday Night NFL games (3m viewers) and the Presidential debates (3.3m viewers) have been encouraging; Twitter has signed more than a dozen live streaming partnerships with the Melbourne Cup this week streamed in Australia for the first time
- Making it easier for new users to sign up and understand the platform remains a key focus: to this end, the service is being refined in 4 key areas being onboarding, home timeline, notifications and tweeting
With steady growth, cost rationalisation (9% of the workforce will be cut) to stabilise financial performance and some exciting developments in streaming video, this was a reasonable set of results from Twitter. However with underlying losses and the continuing strength in other social networks (Facebook and Snapchat in particular) leading to fierce completion for ad spend, challenges remain for the network everyone loves to talk about. Jack’s influence has been a positive one since he came back as CEO a year ago, but the takeover rumours will continue with overall performance (and the market cap) at these levels.
By Adam Fraser
Twitter is many things to many people but I have long focused on the customer service aspect around Twitter’s functionality.
As previous podcast guest and well known author Joseph Jaffe said:
“It is the greatest customer service tool ever created bar none. And nothing else on Twitter makes sense in my opinion.”
To understand the impact of customer service interactions on customer relationships, Twitter designed a research study in partnership with Applied Marketing Science to figure out the potential revenue benefit to businesses who help their customers via Twitter. The results showed some demonstrable benefits of effective customer service on Twitter.
Some of the key findings were:
- When a customer Tweets at a business and receives a response, they are willing to spend 3–20% more on an average priced item from that business in the future
- Customers are 44% more likely to share their experiences—both online as well as offline—after receiving a response from a business on Twitter
- Customers are 30% more likely to recommend the business, and respond an entire point higher (2.66 vs 3.66) on customer satisfaction surveys
- It pays to reply rapidly. When an airline responded to a customer’s Tweet in less than six minutes, the customer was willing to pay almost $20 more for that airline in the future. Similarly, in the telco industry, customers are willing to pay $17 more per month for a phone plan if they receive a reply within four minutes, but are only willing to pay only $3.52 more if they have to wait over 20 minutes.
- 69% of people who Tweeted negatively say they feel more favorable when a business replies to their concern. (HT to Jay Baer re his book Hug Your Haters)
- Aspect Research found that consumers like coming to Twitter because they perceive it as significantly less frustrating than other customer service channels – even preferring it slightly more than in-person interactions.
Whilst clearly Twitter’s research is self serving, it confirms my fundamental belief on the importance of social listening and social response as foundation aspects of any enterprise social media strategy.
By Adam Fraser
The pace of change is so rapid, the fragmentation so systematic, it is getting hard to follow who specialises in what and who competes with who in the media landscape.
Traditional broadcast TV investing in streaming video on demand, offering catch up viewing on any device.
Streaming video on demand specialists such as Netflix offering ad free, subscription based offerings of premium content.
YouTube – the leading online video sharing social network – moving into the premium TV, paid market.
Facebook and Twitter moving heavily into live streaming; Twitter acquiring rights to premium live sports content such as the NFL; Optus (a telco) acquiring rights to the English Premier League.
Now in the local market, the original Pay TV disruptor Foxtel – itself subsequently disrupted by everything from Apple TV to Netflix – has made a major strategic shift. In a major announcement, Foxtel is overhauling the pricing strategy for its streaming video on demand player, Foxtel Play, with new offerings ranging between the $9 to $15 range. Bang in the territory of Netflix, Stan and Presto. Significantly cheaper than its set top box facilitated, traditional broadcast packages.
This is a major change; for the first time customers can bring their own device and access Foxtel via a connected TV, tablet or mobile device. No longer any need to install a set-top box or pay upfront and no minimum term fees.
As well as accessing a new more price conscious segment of the market, there is no doubt Foxtel will also self disrupt and cannibalise its own customers. Brave but necessary.
Underpinning all of this fragmentation is the core disruptive nature of the internet, and the separation it facilitates between content and its historical distribution “partner”. What we used to call “TV” can now be defined as video content accessible on multiple devices at a time of the user’s choosing. Video is no longer trapped inside a physical “television” appliance. In the same way “radio” can now be seen as audio content (podcasting) accessible on multiple devices not just a radio appliance and “newspapers” are written content previously only accessible via a printing press, now accessible anywhere.
Foxtel’s announcement is in itself only one small chess move in a decade long game theory playing out in the media sector. The magnitude of the change is another illustration of the fundamental and rapid shifting of the sands in the media landscape.