Coronavirus hits Twitter’s advertising revenue, causing senior management to mull alternative ways to make money from users
Twitter’s CEO Jack Dorsey has announced the platform is actively exploring additional ways to make money from its users, including mulling a possible subscription model.
The surprising admission came after Twitter reported its second quarter results on Thursday, which revealed a sharp decline in its core advertising business during the Coronavirus pandemic.
Twitter is also reeling from the impact of a hack last week that saw the Twitter accounts belonging to some very public figures and corporations including Elon Musk, Jeff Bezos and Bill Gates, tweeting a bitcoin scam that offered to double people’s bitcoin payment.
For the second quarter ending 30 June, Twitter posted a net loss of $1.2 billion, compared to a net profit of $1.1 billion in the same year ago quarter.
There was equally bad news on the revenue side, after sales for the quarter fell 19 percent to $683m from $841m a year earlier.
Ad revenues, which make up 82 percent of Twitter’s revenue, in the quarter had slumped to $562m, a 23 percent decrease compared to the same quarter a year ago.
Twitter has struggled to build out its ad offerings, leaving it reliant on a suite of promotional tools geared toward advertising around big events and product launches, which have all but vanished during the pandemic, Reuters reported.
However Twitter shares rose 4 percent in early trading Thursday following the earnings results, thanks to its highest-ever yearly growth of daily users who can view ads, beating analysts’ estimates.
Twitter’s average monetizable daily active users (mDAU) increased 34 percent year over year to 186 million, above analysts’ estimate of 176 million, in a rise it said was primarily driven by external factors such as lockdowns and increased conversation around the Covid-19 pandemic.
CEO Jack Dorsey opened a conference call with analysts by once again saying sorry for the hack that compromised the accounts of high-profile users last week, saying “we feel terrible.”
He then revealed the firm was seeking new ways to make money from users, after the fall in advertising sales.
“You will likely see some tests this year” of various approaches, Dorsey reportedly told analysts.
Dorsey added he has “a really high bar for when we would ask consumers to pay for aspects of Twitter,” but confirmed that the company is seeking to diversify its sources of revenue in what are “very, very early phases of exploring.”
Twitter of course is free, but it relies on advertising and allowing brands to target adverts at users to make money.
Earlier this month, rumours exploded about a potential paid Twitter option after the company posted a job opening focused on building a subscription platform codenamed “Gryphon.”
“We want to make sure any new line of revenue is complementary to our advertising business,” Dorsey reportedly said. “We do think there is a world where subscription is complementary, where commerce is complementary, where helping people manage paywalls … we think is complementary.”
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