Why Twitter’s Ad Prices Are Falling



Twitter’s ad prices showing signs of stabilizing

Twitter’s (TWTR) ad prices have been in a declining trend for more than a year. In the recently reported first quarter, the company disclosed a 4.0% YoY drop in its ad prices.

Although the decline in Twitter’s ad prices has continued in recent quarters, they are showing signs of stabilizing. The 4.0% decline in ad prices recorded in the first quarter compared to the 7.0% decline in the fourth quarter, a 14% decline in the third quarter, and a 32% decline in the second quarter. Twitter’s ad prices dropped 28% in the first quarter of 2018.

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Twitter expects ad prices to keep changing

According to Twitter, investors should not read too much into how its ad prices are moving. The company says its ad prices will keep on changing because ad pricing on its platform is affected by a variety of factors from ad formats marketers are purchasing to events happening at a particular time. But Twitter’s CFO Ned Segal also said recently that falling ad prices doesn’t mean that they are moving toward zero in a bid to stay competitive.

Snap (SNAP) and Facebook (FB) also have been reporting falling ad prices. Snap’s ad prices were down 42% YoY in the first quarter, whereas Facebook’s ad prices dropped 4.0% in that period.

Twitter’s advertising revenue rose 18%

The falling ad prices seem to be attracting more advertisers to Twitter, as the company’s advertising revenue increased 18% YoY to $679 million in the first quarter. Facebook’s advertising revenue rose 26% YoY in the first quarter. Google (GOOGL) and Yelp (YELP), which have yet to release their first-quarter results, recorded 20% and 12% YoY increases in advertising revenue in the fourth quarter, respectively.


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