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After Sharp Decline in Ad Revenue, Twitter Considers Subscriptions

Following a steep decline in advertising revenue, Twitter says it will test a subscription service later in the year.

Earlier today, the social media giant reported ad revenues of $562 million, down almost a quarter (23%) on a year ago — saying that the pandemic and “civil unrest” had forced many advertisers to pause campaigns, both contributing to the decline. The US, its biggest market, saw a drop of 25% in ad spend.

“You will likely see some tests this year” of various approaches, Dorsey told analysts on an investor call held to discuss the company’s second quarter earnings results.

Dorsey said he has “a really high bar for when we would ask consumers to pay for aspects of Twitter,” but confirmed that the company is seeking to diversify its sources of revenue in what are “very, very early phases of exploring.”

Earlier this month, rumors flared about a paid Twitter option after the company posted a job opening focused on building a subscription platform codenamed “Gryphon.”

Twitter’s stock surged at the time, signaling investor appetite for the company to find new revenue streams.

Shares of Twitter rose 4% in early trading Thursday following the earnings results.

Like its rival social networks, Twitter has focused on offering a free service and making money by allowing brands to target ads to its millions of users.

“We want to make sure any new line of revenue is complementary to our advertising business,” Dorsey said. “We do think there is a world where subscription is complementary, where commerce is complementary, where helping people manage paywalls … we think is complementary.”

The company has also been hit by advertisers participating in an ad boycott of social media, linked to the nationwide racial justice protests. But Twitter executives declined to say how much of an impact the boycott has had on Twitter’s business.

Twitter’s earnings report follows what Dorsey described as a “tough week” in which the company scrambled to address a massive hack that compromised numerous verified accounts, including those of Barack Obama, Joe Biden, Elon Musk and Jeff Bezos.

On the eve of its earnings results, Twitter announced that dozens of accounts — including one elected official in The Netherlands — may have had their direct messages accessed by hackers as part of the security incident.

Dorsey apologized on the conference call Thursday for last week’s massive security breach, saying “we fell behind” on the company’s security obligations.

“We feel terrible about the security incident,” he said.

“Security doesn’t have an end point. It’s a constant iteration… We will continue to go above and beyond here as we continue to secure our systems and as we continue to work with external firms and law enforcement.”

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Copyright 2020 SIGNAL. Permission to use portions of this article is granted provided appropriate credits are given to www.signalng.com and other relevant sources.

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