Personal Finance

Twitter Makes Another Bid to Win Over Advertisers

Twitter app being used on a cellphone.

One area where Twitter (NYSE: TWTR ) has shown promise is in delivering consistent revenue. The bulk of that revenue comes from advertisers.

Year Total Revenue Ad Revenue Ad Revenue as a Percentage of Total Revenue
2014 $1.403 billion $1.255 billion 89%
2015 $2.218 billion $1.994 billion 90%
2016 $2.529 billion $2.248 billion 89%

Data source: Twitter. Chart by author.

The company recently announced a move to help advertisers better measure the effectiveness of advertising on Twitter. It signed on with "industry-leading third-party measurement providers" to help advertisers better verify if their ad was delivered to the right audience, including making sure the audience was human. This is important for advertisers who are questioning the authenticity of the data they are receiving from social media platforms as well as the efficacy of advertising on these platforms.

Twitter app being used on a cellphone.

Image source: Twitter.

Why advertisers are concerned about social media platforms

Last year, Facebook was caught in an awkward position when it had to explain that it had been overstating the average time people viewed video ads on its platform. The fault was in the methodology the company was using, which cast aside all data from ads that were viewed for less than three seconds. Reports indicated the company had overstated average viewing times by between 60% and 80%. The company admitted the problem had been in existence for a period of two years and said it would take steps to eliminate the mistake.

In March of this year, YouTube received an ultimatum from advertisers who pulled their ad spend from YouTube until it could guarantee that brands would not see their ads appear next to extremist videos.

Like Facebook Alphabet quickly accepted responsibility for the problem and agreed to remedy the situation for its advertisers.

Twitter's plan to help advertisers

Twitter is looking to have third parties enhance the platform's measurement capabilities by providing advertisers with an independent verification of the viewability of their ads and advise advertisers as to whether the ad reached the intended audience.

Advertisers paying for ads that aren't viewed by humans is part of ad fraud, which costs advertisers an estimated $8.2 billion per year in the United States, according to the Interactive Advertising Bureau. Twitter wants advertisers to know who or what is seeing their ads. It has formed new relationships with two companies: Moat, which Qualcomm just announced it's buying, and Integral Ad Science. Advertisers can use either company to verify that their ad is seen by humans, as opposed to bots. Twitter said a review of its ad impressions showed more than 99% were viewed by humans.

Twitter also announced expanded relationships with Nielsen and comScore that will allow advertisers to measure whether their ads were delivered to the intended audience. Nielson Digital Ad Ratings helps advertisers look across computer and mobile viewing on a next-day basis to ensure their message is reaching the desired audience while comScore's validated Campaign Essentials delivers real-time data.

By working with four different measurement companies Twitter is allowing its advertisers a wide choice of who they can work with to verify that the ad dollars they spend on Twitter are being put to good use.

Giving credit where credit is due

Twitter has struggled with growing its user base, although its recent first-quarter report showed a boost of 9 million monthly active users from the previous quarter. Management also deserves credit for being proactive and creating relationships with third parties to help instill confidence in its advertisers, which will hopefully bring more advertising dollars to the company.

10 stocks we like better than Twitter

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Twitter wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of April 3, 2017

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Frank DiPietro owns shares of FB and TWTR. The Motley Fool owns shares of and recommends GOOG, GOOGL, FB, QCOM, and TWTR. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Personal Finance Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More