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Why Twitter Is Failing to Monetize the International Market

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Focus on developed countries

Twitter (TWTR) has disclosed its user base outside of the United States for the first time. The company’s monthly active users (or MAUs) in the world’s third-largest economy, Japan (EWJ), stand at 35 million. Similarly, Facebook’s (FB) MAUs come in at 25 million in Japan.

Twitter generates the majority of its revenues from the domestic market, although it has a large international user base. International usage brings in less advertising revenue due to lower pricing in emerging markets (EEM). The company is largely focusing on international users from developed countries such as Japan and the United Kingdom (EWU).

Why Twitter Is Failing to Monetize the International Market

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Key market for Twitter

Revenues from international markets for Twitter account for 35% of its total advertising revenues, according to the most recent quarter’s results. In Japan, “We’ve seen more than a five-fold growth in usage in a really short time,” said Shailesh Rao, vice president of Twitter’s Asia-Pacific, Latin America, and Emerging Markets.

Twitter had less than 7 million users in Japan in 2011. Rao says that over the years, Twitter has seen a wide acceptance of its platform by Japanese users, primarily driven by the adoption of news update services after the earthquake and tsunami that hit the country five years ago.

In 2015, advertising revenues from Japan grew at twice the rate of international markets on a year-over-year basis. According to analysts, Japan is a developed economy and is a key market for Twitter to generate revenues with high-priced ads compared to emerging countries such as India (EPI) and Indonesia.

Amazon (AMZN) constitutes 1.3% of the SPDR S&P 500 ETF (SPY).

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