Commentary

New Media Should Focus On Real Ad Metrics

by Wayne Friedman , Staff Writer, August 28, 2017

Users don’t equal revenue — especially when it comes to digital ad revenue, says Brent Thill, senior internet analyst of Jefferies, who downgraded Twitter to a “hold” versus a “buy.”

Advertising -- especially the return on media investment -- is the real issue. And it's growing.

Thill told CNBC on Friday there are far better choices for advertisers that get ROI with Facebook or Google. Yes, they both have high global users. But even then, it’s really about revenue per user.

“Every time advertisers we speak with go back to the Twitter platform, they don’t get the ROI; [instead] they stick with the proven categories,” he says.

Thill says that Twitter rivals, such as Snapchat, post better engagement numbers. Snap in particular is just a better platform for video.

Advertisers want multiple digital media platforms as part of a healthy overall marketplace for their messaging. Analysts are still cheering for Twitter. Thill says Twitter has recently made some strong hires, and doesn't rule out a comeback.

Back in April, Twitter reported an 11% drop in first-quarter advertising revenue to $474 million. Overall revenue for the period declined -- a first for the social media platform. The second-quarter results had Twitter's advertising revenue slipping another 8% to $489 million.

Here’s some good news: In the first quarter, Twitter reported monthly active users had increased by 6% over the past year to 328 million, which stayed at the same level in the second three months of the year -- a silver lining for analysts.

Regardless of that stronger business measure, Thill says investors need to take a wait-and-see approach. At Friday’s close, Twitter stock dipped 1.4% to $16.65; Snap was up 1.7% to $14.76.

For many in the digital space, it’s all about video. Estimates from eMarketer predict digital video advertising could rise to $11.7 billion next year. Video ROI metrics in the digital media space are of major importance to marketers; especially when it comes to those digital users “engaged” with their messaging.

More than the number of users, this engagement will mean a direct line to what really matters: big future digital revenue.

advertising, digital, engagement, social media, twitter

3 comments about "New Media Should Focus On Real Ad Metrics".

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James Smith from J. R. Smith Group, August 28, 2017 at 9:29 a.m.
Wayne--The opening sentence...per Thill..."users don't equal revenue..." Would it be fair to say TV "viewers" don't equal revenue either? While I can't specifically comment on Twitter's situation, it seems from the torrents of digital ad news that the digital platforms are addressing some of the ROI issues...namely buying/renting/collecting consumer purchase data; not to mention the resident data advantages of Amazon,WalMart and other mega retailers/etailers. It will obviously take time to shake down but I suspect pressure from brands will speed the process.
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Ed Papazian from Media Dynamics, August 28, 2017 at 10:07 a.m.

James, for years radio and magazines have had lots of listeners and readers but this alone doesn't translate directly into ad dollars just as the fact that daytime TV 's audience stats do not yield the same level of ad revenues per viewing as primetime TV's viewings. It's all a matter of percieved promotional or communicative value as determined, often subjectively, by advertisers, not just "audience". The same obviously applies to digital media, though here, there are issues not associated with traditional media, namely lack of ad visibility, fraud, difficulties in reach attainment due in part to ad blockers, etc.

John Grono from GAP Research, August 28, 2017 at 10:41 a.m.

I think a good start for digital media would be to stop talking about "monthly active users". A person need only be active for one second in a month and they count exactly the same as someone who uses a website (such as a news site) every day. The currency should be "average daily users".

We recently launched daily Digital Content Ratings here in Australia. I think some people got a rude shock when looking at the weekly reports of the 'average daily unique audience' compared to the old Monthly Unique Audience which was basically a monthly cumulative audience with a one-second threshold.