Twitter’s Finance Chief Highlights Spending Priority

Twitter spent more on marketing than on products in 3Q17

Although product improvements and marketing activities have together contributed to driving double-digit growth in Twitter’s (TWTR) daily audience, the company’s financial chief recently disclosed that the company would do more investing on the product side of things than on the marketing side.

In 3Q17, Twitter spent $136.1 million on product development (or R&D) compared to about $173 million spent on marketing in the quarter. Facebook’s (FB) R&D budget in 3Q17 was $2.1 billion, compared to $4.2 billion at Google parent Alphabet (GOOGL), $233 million at Snap (SNAP), and $45.8 million at Yelp (YELP).

Twitter’s Finance Chief Highlights Spending Priority

Product investment linked to improving user experience

When he spoke at a recent UBS global technology conference, Twitter’s chief financial officer, Ned Segal, linked continued investment on the product side of the equation to a need to improve the user experience so that people can come to Twitter more frequently and spend more time using the service.

People keep coming back to Twitter

At Twitter, Segal hinted, there’s a feeling that the company has tremendous growth potential if it could just do more on the product development side and combine those efforts with marketing. In highlighting Twitter’s potential, Segal cited statistics that showed that more than 2.0 million people that haven’t used Twitter for 30 days or more come to the platform every day. Of this number, two-thirds have been on Twitter before but haven’t used the service for 30 days or more. The remaining one-third are people that haven’t used Twitter before.

“There’s two sides to that coin. One is, it just gives you a sense in both the stability and the size of that opportunity that there are so many people who know a lot about Twitter already but that we have a big opportunity in front of us to get them to stay once they are there,” Segal said of the statistic of ~2.0 million new users coming to Twitter every day.