Thanks to a decline in ad revenue, social media giant Twitter has posted their lowest revenue growth since the company went public four years ago. Projected to hit $740 million in revenue, the site had less than $720 million – a fairly large sum.
Even though the number of Twitter users rose in 2016 over the previous year, revenue from ads fell. Shares of the company dropped more than 10% as investors fear newer social media sites are winning the heated war for advertising eyeballs. A decline in advertising revenue is certainly nothing unique to Twitter though, as people who make money with their own blog have seen this trend as well.
As newer social media sites gobble up users, Twitter has struggled to find a formula that will attract a new user base and new advertising.
Twitter expected what they called a “Trump Bump.” Since America’s new President uses the site so regularly (and so bombastically), many experts predicted the site would see a sudden uptick in users. That didn’t happen though. “The shocking part is that the Trump effect was zero. Their growth actually slowed during the quarter,” said Michael Pachter, an online securities analyst.
Twitter CEO Jack Dorsey simply asked for patience. He said that Twitter is investing in new “machine learning” technology and searching for new ways to engage advertisers.
“While revenue growth continues to lag,” he said, “we are applying the same focused approach that drove audience growth to our revenue product portfolio, focusing on our strengths and the real-time nature of our service. This will take time, but we’re moving fast to show results.”
The site’s CFO Anthony Noto said that when it come to advertising, the company is getting positive feedback from the ad partners, but “revenue growth will continue to lag audience growth due to the sales cycle, and could be further impacted by the escalating competition for digital advertising spending and our efforts to re-evaluate our revenue product feature portfolio.”