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Twitter Losing Users, but Raking in Revenue?

Twitter Losing Users, but Raking in Revenue?
Madeleine Coe

Despite failing to attract enough new users to meet projected goals, Twitter’s revenue has experienced exponential growth over last year’s earnings with a 61% increase to $502.4 million with a projected (and hopeful) year-end goal of $540 million. The lack of engagement from users doesn’t seem to be inhibiting the ability to monetize their service, as Twitter’s ad revenue accounts for most of the company’s earnings.

So, what is Twitter doing to bring in new users and engage with current users? A big marketing push later this year.

During Q2 of 2015, Twitter only gained about two million users, just a 12% increase during that three-month period. The rate at which they are accumulating new users has actually decelerated. An additional 12 million people per month access Twitter via text messaging to follow specific users, but without registering their own Twitter account, meaning Twitter has no way to target ads towards this mystery audience.

Twitter executives are perplexed. Despite the easy-to-use interface, many report an inability to understand how or why to use Twitter. Even more problematic, less than half of regular users are not active on the site daily.

Internally, Twitter is also struggling to find stable management. CEO Dick Costolo jumped ship at the end of June and they lost two more major execs this week, including their VP of Product Management. They are lacking a Chief Marketing Officer, so CFO Anthony Noto is pulling double duty to manage their marketing as well.

What’s the plan?

Project Lightning is set for this fall, a roll-out of updates intended to enhance the user experience. For dedicated Twitter users, it will become much easier to curate content, especially breaking news and live events. The updates will take advantage of the surges in interest that occur during big events like the World Cup or debut airings of new TV episodes for hit shows like HBO’s “Game of Thrones,” AMC’s “The Walking Dead” (most tweeted about show in 2014), and ABC Family’s teen murder mystery “Pretty Little Liars.” Project Lightning will be important to both users and advertisers looking to target users with timely, relevant ads.

The challenge of attracting new users is of utmost importance to Twitter, especially when it comes to pleasing businesses who purchase ad space on the social media network. The company is in dire need of a marketing strategy and a new CMO to execute it if they want to continue to maintain a broad enough audience to offer ad targeting to specific categories of users and retain ad revenue.

Twitter is far from going under, and continues to experience global brand recognition, but not the mass-market user base that should be coming with it. Their Q2 financial results allow for some optimism as Twitter top executives brace themselves for the challenges ahead.

Sources: Ad Age, NY Times

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