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Twitter’s S-1 Highlights Strength Of Mobile, International Advertising Opportunities
In its S-1 filing made public yesterday, Twitter disclosed international users make up 77 percent of Twitter’s average MAUs (monthly active users). Yet, international advertisers generated just 25 percent of consolidated revenue in the three months ended June 30.
Twitter’s second quarter advertising revenue per timeline view (which is what the company is reporting instead of revenue per user, and which actually means revenue per 1,000 timeline views) was $0.80, a 26 percent year-over-year increase according to the filing.
The revenue per timeline view is significantly higher in the U.S. at $2.17, compared to just $0.30 outside the U.S. However, the international advertising revenue per timeline view grew 111 percent from the same period in 2012, compared to 26 percent growth in the US. Advertising revenue is reported based on the billing location of the advertisers, not the location of the users. The company is clearly focused on improving international revenue performance and has made key hires and expanded its international offerings in the past two years.
Advertising accounts for roughly 85 percent of Twitter’s revenues of $316.9 million in 2012. Nearly all ad revenues come from its suite of Promoted Products: Promoted Tweets, Promoted Accounts and Promoted Trends. The company introduced Promoted Products on its iOS and Android mobile applications in February 2012. Over 65 percent of the company’s advertising revenue was generated from mobile devices and that it expects proportion to grow in the near term.
In an interesting move, rather than disclose the typically-used average revenue per user Twitter’s S-1 instead reported on advertising revenue per 1,000 timeline views, stating, “We believe that advertising revenue per timeline view is a measure of our ability to monetize our platform.”
This obviously makes it difficult to compare to its competitors. The team at Quartz did the math to figure out Twitter’s revenue per user using the information provided in the S-1. According to their calculations Twitter’s Q2 2013 average advertising revenue per user was $0.55, compared to Facebook’s $1.41 in the same period.
Twitter identified the following as its key opportunities for advertising growth:
- Targeting. We plan to continue to improve the targeting capabilities of our advertising services.
- Opening our Platform to Additional Advertisers. We believe that advertisers outside of the United States represent a substantial opportunity and we plan to invest to increase our advertising revenue from international advertisers, including by launching our self-serve advertising platform in selected international markets.
- New Advertising Formats. We intend to develop new and unique ad formats for our advertisers. For example, we recently introduced our lead generation and application download Twitter Cards and Twitter Amplify, which allows advertisers to embed ads into real-time video content.
MoPub, the mobile-focused advertising exchange that Twitter agreed to acquire in September, will certainly play a significant role in expanding Twitter’s role in mobile programmatic. The company said, “We also plan to use MoPub’s technology to build real-time bidding into the Twitter ads platform so that our advertisers can more easily automate and scale their advertising purchases.”
The company disclosed monthly ad engagements increased sequentially over the past year as a result of increases in MAUs, timeline views per MAU, and advertiser demand.
The average cost per ad engagement decreased in the same time period due to an increase in ad inventory with the expansion of Promoted Products to Twitter’s mobile apps and international expansion in 2012.
On Wednesday, Richard Alfonsi, vice president of global online sales for Twitter, spoke with Marketing Land’s Danny Sullivan at SMX East about the future of Twitter’s advertising products. Read the live blog and watch the video here: SMX East: Twitter’s Richard Alfonsi On Ad Products, Second Screen Experience & More.