Arif Durrani
Mar 11, 2014

Twitter attracts more ads, but rates tumble 67%

Average cost of advertising continues to fall as the number of ads it carries increases; rates down 18 pc in Q4 and 67 pc for 2013, according to Twitter’s annual report

Twitter attracts more ads, but rates tumble 67%

Total ad revenue generated by Twitter increased 110% to $664.9m in the year to 31 December.

Earnings before interest, taxes, depreciation and amortisation grew 256% year-on-year to $75m. Operating expenses such as marketing and research and development meant Twitter posted a full-year net loss of $645m.

In the UK, Twitter generated $23.5 million (£14.1m) in the last three months, and $43.1m (£25.7m) in the previous nine months.

However, Twitter's average ad rate has been declining since 2012. It’s down 81% from that point, according to data compiled by Quartz from regulatory filings.

Twitter concedes rates have been falling because its inventory—the supply of available space to advertise on Twitter—is increasing. It also says that lower rates appeal to small businesses and international advertisers.

Twitter added in its annual report filing with the US Securities and Exchange Commission that the company faces "significant competition for advertiser spend".

It noted: "The substantial majority of our revenue is generated from the sale of advertising services, and we compete against online and mobile businesses and traditional media outlets, such as television, radio and print, for spending on advertising.

"We believe that our ability to compete effectively for advertiser spend depends upon many factors, including the size and composition of our user base; our ad targeting capabilities; the timing and market acceptance of our advertising services; our marketing and selling efforts; the return our advertisers receive from our advertising services; and our reputation and the strength of our brand."

In its report, Twitter noted that the lower cost of its Promoted Products services has made it more attractive for small and medium sized businesses to promote their brands, products and services and amplify their visibility and reach on Twitter.

Increasingly, it's the Interest Graph of Twitter users that are most valuable for advertisers, enabling them to target in real-time based on their interests - garnered through who they are following and retweeting.

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