The Strategist

Leaked Twitter's Loss

04/29/2015 - 16:26

Twitter Inc. is going through the difficult times. The CEO Dick Costolo and his new management team continue to convince investors that there are still ways to increase the number of users and increase profits.

Kevin Krejci
Kevin Krejci
However, this runs counter to the company's earnings report for the second quarter. According to it, the company lost $ 162 million.

On Tuesday, the company issued guidelines on sales in the current year and the quarter, as revenue in the previous quarter rose less than expected. The company's shares fell 18 percent an hour after the opening bell.

Quarterly results were published earlier than planned because the company's earnings did not meet expectations, according to Selerity website. The company does not profit from the investment in the expansion of the office, new information centers and talents.

The report about Twitter having not best times appeared on a page of Selerity research firm a few hours before the official announcement of the indicators. As a result, shares of the social network fell by 18%. It is noteworthy that all of the data were taken from Twitter corporate site, the experts of Nasdaq OMX Group are in charge of. Of course, the report was published prematurely by mistake.

How does Twitter make money?

Twitter has three main advertising formats: Promoted tweets, Promoted accounts and Promoted trends. Trends are popular topics propagating all around Twitter. Sponsored trends are published in the top most discussed topics with warning of advertising publications and close to user’s chronicle in the form of hashtags. Only one brand from each country can buy a promoted trend per day.

The first two formats are sold at auction model. Step rate in the auction - $ 0.01. The minimum effective rate can be predicted depending on the category and the context in which the advertiser is located. The rate imposed for cost per engagement. Such interaction counts differently for each format. In promoted account, the fee is taken for each press on the ‘follow’ button. The promoted tweets all depend on the purpose of the campaign. If, for example, a client needs to download the application, the fee is taken for each press of the button ‘install’, and if the task is to show a video, then for the view.

Fixed price is only for ‘promoted trends’ format: it statically placed for a day. Cost varies in different countries. For example, in the US, according to the online edition All Things Digital (ownership of Dow Jones & Co.), the format in 2013 was worth $ 200 thousand. A year ago - $ 150 thousand per day. In Russia, for example, this format costs $ 10 thousand.