Twitter’s advertising revenue was hit hard by the pandemic, and the company says the “United States civil unrest” in May and June also made things worse. Advertising revenue decreased 15 percent year-over-year in the last three weeks of June, Twitter said, as brands slowed down or paused spending entirely. “Demand gradually improved once brands returned after protests subsided,” Twitter said this morning in its 2020 second-quarter earnings report.
Trademarks are known to prevent ads from appearing in close terms such as “Black Lives Matter”, “George Floyd” and “protest”. At the same time, several major advertisers, including Starbucks, Unilever, and Coca-Cola, stopped advertising on most social media platforms in June. The ad pause initially focused on concerns about hate groups on Facebook, but they expanded to include other platforms at a time when companies may have wanted to limit their spending anyway.
With the exception of “late May to mid-June,” Twitter says advertising revenue has improved from its lowest point at the start of the pandemic in March. There was a “gradual and moderate recovery,” Twitter said, but it was not enough to offset the heavy losses. Twitter’s total revenue fell 19 percent during its second quarter, once again pushing the company online – its second consecutive loss after remaining profitable since late 2017.
Advertisers have been adjusting their budgets as the pandemic forces consumers, particularly in the United States, to cut spending. That means less ad sales for Twitter, which is their main source of income. Advertising revenue fell 23 percent from the same quarter of 2019.
The problems started in the last quarter, when the pandemic hit in the final weeks of the Twitter reporting period. It was enough to cut $ 20 million to $ 80 million in expected revenue and cut all growth in advertising revenue over the past year. At the time, Twitter declined to estimate how much it could earn in the second quarter, given the uncertainty of the pandemic.
A bright point that Twitter highlights is the growth of users. The company grew to 186 million daily users, compared to 166 million in the previous quarter. It also reflects the biggest growth year-over-year (from 139 million) since Twitter started reporting to daily users in 2019 (which it started doing because its previous usage status, monthly users, kept going down).
To make up for the drop in ad revenue, Twitter is working on new features to make money. In a call to investors, Twitter CEO Jack Dorsey mentioned subscriptions and trading as potential opportunities, as well as helping sites manage access to stories through payments. “You will probably see some evidence this year,” said Dorsey.
The pandemic struggles also come as Twitter faces two other serious threats: the consequences of the unprecedented hack earlier this month that saw breaches of top user accounts, and eyes on activist investor firm Elliott Management, which Earlier this year, he attempted to expel Dorsey. Twitter and Elliott finally reached an agreement on user growth and revenue targets that would keep Dorsey on top, but Twitter is likely to miss any revenue target set due to the severe impacts of the pandemic.
