Amid ad-revenue shortfall, Twitter points to ballooning Asia user numbers

Twitter recently suffered its first drop in ad revenue since it went public in 2013, despite pushing hard on video. In the second interview with Campaign Asia-Pacific in four months, APAC VP Aliza Knox drew attention away from last week's lacklustre quarterly results and toward the platform's ad engagement rates and cost per engagement, in a bid to reassure Twitter's lukewarm advertisers. Here’s an edited Q&A of the interview.

How are you reversing the flat usage of Twitter from both users and advertisers?

The highlight of Q4 2016 was actually daily active usage growth accelerating by 11 percent for the third consecutive quarter, while tweet impressions and time spent on Twitter both increased by double digits year-over-year.

Over the year, daily active user (DAUs) grew by 3 percent in Q1 16, by 5 percent in Q2 16, by 7 percent in Q3 16, by 11 percent in Q4 16. This is significant for a company whose user growth looked like it was flattening.

In sports, Australian Open tweets during the tournament were viewed 190 million times and videos were viewed 9.5 million times.

In entertainment, there were nearly 35 million tweets globally about the 65th Miss Universe competition in the Philippines on 30 January (more than the 24 million tweets for Oscars in 2016).

In politics, which can be a dry topic, there were still over 700,000 tweets about the Union Budget in India between 30 January and 2 February this year.

Why did ad revenue fail to keep up with audience growth?

Audience growth is a leading indicator for revenue growth. More users mean more inventory to sell to advertisers.

Twitter’s strongest value proposition is that we are the fastest way to see what’s happening in the world and we enable people to talk about it to see all sides of the story. The combination is unique. No one else offers the speed and engagement of Twitter, and this is why advertisers see us as an integral and differentiated advertising platform in their marketing portfolio.

The Asia-Pacific region continues to be a key growth engine for Twitter. It is our largest and fastest-growing region by users and revenue. In fact, APAC revenue (including Japan) grew more than three times faster than international (outside of US) revenue in Q4 2016, while Greater China was the fastest-growing revenue market in APAC. 

 

We spent a lot of time on Amplify, our video monetisation product. The Amplify deal between Australia's Channel 7 broadcaster and eight advertisers (including ANZ, Blackmores, Campari, Kia, This Australian Life, William Hill) achieved 3.8 million video views, up 428 percent from the previous year.

Video views, as you may know, are more expensive than other kinds of views. So video ad formats, like promoted tweets with video, 'first view' ads and livestreaming deals, represent the future of advertising on our platform.

Our live video ads are attractive to advertisers; with sound on, our completion rates are over 95 percent.

APAC was the first region outside of the US (and Australia the first international market) to monetise a video livestreaming deal by connecting the Victoria Racing Club with sponsors Emirates, Sportsbet, AAMI Insurance and MiRunners for the Melbourne Cup.

Video is also the one of the most engaging ad formats on Twitter. Video view growth in APAC outpaced the world over the past six months.

[Here Knox cited the following stats:

• Global = up 44 percent
• India = up 112 percent
• Indonesia = up 82 percent
• Australia = up 67 percent
• Philippines = up 59 percent]

Globally, total ad engagements were up 151 percent year-over-year driven primarily by a continuing shift toward video ad impressions, as well as higher clickthrough rates (CTR) across nearly all ad formats on a like-for-like basis.

Average cost-per-engagement (CPE) fell 60 percent year-over-year, again due to a higher mix of video engagements, as well as significantly lower video CPE compared to the prior year.

I can't give you the APAC-specific numbers for total ad engagements and CPE, but I can tell you that those two numbers are more exaggerated due to our user growth in Asia. Among our top five user markets worldwide, three of them are in Asia: Japan, Indonesia and India.

Lower cost on the advertiser side would mean lower revenue from Twitter's standpoint, when ultimately all ad pricing options are translated into an eCPM (effective-cost-per-impression) metric on the publisher side?

We're happy about that; we obviously want to drive revenue, but the better ROI is for advertisers, the better long-term business we have, even if the actual CPE or eCPM goes down. 

Is Twitter’s Greater China business struggling without a head?

Our focus in this market is on export advertising or helping Chinese brands to go global. We’ve seen a tremendous amount of demand from Chinese brands and app developers, since they can reach 319 million monthly logged-in Twitter users, an additional 500 million monthly logged-out visitors and over a billion people when you include MoPub for in-app advertising off the Twitter platform.

In fact, I don't mean to be repetitive but Greater China is our second largest revenue market in APAC today (behind Japan). We grew our Greater China advertiser base nearly 400 percent over the past two years.

Kathy Chen helped us to build up Greater China and after she left to take a course in the US, we still have strong momentum under our Greater China head of sales Alan Lan, who is based in Singapore. Alan is the person who has always been driving our China ad sales. Kathy was a complement to him.

After Kathy's departure, we have kept our Hong Kong office open for our sales, marketing and partnerships teams to use. There is nobody full-time there now, but we have our teams from Singapore going in and out of the office.

Huawei is one of our biggest advertisers from China. The client developed a Connect 2016 conference during September 2016 to boost its profile with IT decision-makers in Asia as a champion of innovation.

The brand then provided regular extracts from key sessions to amplify the event to a global audience via Twitter's promoted videos, achieving 9.6 million impressions and a 36.1 percent video view rate. 

In an op-ed published only last month, Maya Hari (managing director of Southeast Asia and India for Twitter) was still advocating that social-media channels make it easier for consumers to hit the 'buy button', but Twitter's own 'buy button' has been phased, right?

The 'buy button' was great and may come back at some point to enable direct purchases off our platform. The button was in beta at that time, and I think one of the things we had to do when streamlining our platform was to take some products that were still in beta and decide not to work on that, but to double down on what consumers want from us and not be distracted.

In the US, Facebook has agreed to an outside audit of advertising data by the Media Rating Council, are you making any preemptive move to verify the accuracy of Twitter’s own ads in Asia?

Right now, there has been no concerns about our metrics. Every now and then there may be some discrepancies about our metrics, particularly when there are third-party tracking providers (we work with eight) involved, which we will investigate, but there has been none on a wide scale and, if any, it doesn't happen too often. 

What is the Trump effect on Twitter's audience growth?

Everyone wants to ask about Trump, so we've actually done some research to answer that question, and the answer is no. We don't comment on an individual account, but it is true that we are a live communications platform that world leaders, political parties and politicians use for e-governance and digital diplomacy.

However, the majority of our re-accelerated audience growth is coming from product improvements and marketing activities focused on our value proposition as the fastest way to see what's happening in the world and talking about it to see all sides of the story.