Mar 25, 2020 Facebook and Twitter see massive usage surges — but their ads can't capitalize on it Read More Well, this is awkward... We're familiar with the concept that if a product is free, our attention likely is the product. With everyone cooped inside because of coronavirus, virtual communication is more important than ever. So is not going outside. That means way less shopping/spending, and puts ad-reliant social media giants in an awkward situation:
Facebook: Messaging across FB's apps in the hardest hit countries has surged 50%, while video chatting has more than 2X'd. In Italy alone, group video calling is up 1,000% from a month ago, and FB app usage is up 70% across the board.
Twitter: Daily usage has jumped a whopping 23% this year thanks to desperately inactive Twitter fingers.
But social media relies on ad sales... While people need social media more than ever, advertisers have never needed it less. Marketers won't waste big marketing bucks on ads if you won't buy their products anyway (no one cares about the new spring eyeshadow palette when all you need is a robe to stay home). So Facebook and Twitter haven't translated the usage surge into ad $$$.
The Takeaway:We could face ad-pocalypse 2020... When spending drops during economic downturns, so do ad sales. Twitter revealed its ad sales may have dunked as much as 20% in March. Facebook expects something similar. The bright spot for ad-reliant media companies is that they might retain this larger/more engaged user base when the economy rebounds. But think about the 2 types of companies and their demand for ads:
Companies that sell essentials (like food/TP) don't need ads right now (you're buying TP no matter what).
Companies that sell non-essentials don't want ads because their stores are closed. Mar 2, 2020 Twitter's CEO Jack Dorsey gets "ultimatum'd" by a hedge fund — might lose CEO-ship Read More Not getting vipassana meditation vibes... — Elliott Management. The huge hedge fund has bought up over $1B worth of Twitter stock and is putting that power right to work — first by reportedly nominating 4 new directors to Twitter's board. But Elliott also reportedly wants to remove/replace Twitter's CEO/co-founder Jack Dorsey. They think Twitter's better off with a new CEO because...
He's (too) quirky: Silicon Valley founders are known for their visionary-ish eccentricity. Dorsey takes it to another level: 10-day silent vipassana meditations in Myanmar, a planned 6-month trip to Africa this year, eating 1 meal a day, walking 5 miles to work each day. Objectively cool, but investors are concerned.
He's got a (huge) 2nd hustle... Dorsey's also the CEO/co-founder of Square, the digital payments company valued at $35B (more than Twitter's $27B). This double CEO-ship of 2 big public companies is unusual. Elliott wants a CEO for Twitter focused on Twitter.
Annnd, Jack might have a favorite child... Dorsey owns $531M worth of Twitter stock, but a re-tweetable $4.9B of Square stock. Twitter's stock is barely higher now than it was in 2013 when it IPO'd — meanwhile, Square is thriving.
The Takeaway:The multi-tasking eccentric CEO thing only flies in certain scenarios... Here are the 2:
If the company is thriving or its stock is up (like with Musk's Tesla), investors may tolerate extracurriculars. But Twitter's earnings growth and share price have lagged.
When a founder is given super-voting stock (like Facebook's Zuck) his/her power is protected against investor pressure. Jack Dorsey has neither — and could get sacked from the company he founded.
Feb 7, 2020 Twitter posts record $1B revenue as it focuses on self-care Read More Back from the spa... Twitter is feeling refreshed after posting $1B in quarterly revenue for the first time. What it really wants you to know: it's "healthier" now ("health" was mentioned 8 times in its shareholder letter — more than "profit"). To Twitter, healthy means fewer trolls, less fake news, less trolling. Twitter's self-betterment moves:
Made it easier to report problematic/abusive content and introduced a feature to hide certain replies — Twitter calls this "proactively limiting the visibility of unhealthy content."
Invested in employees and AI to help remove deepfakes (photos/videos altered to trick you). On Tuesday, Twitter said it would apply warning labels to tweets with "false" or deceptive media.
Banned political ads. And labeled actual politicians who are actually running in 2020 elections.
The Keto-worthy mindfulness cleanse is working... Twitter's daily users grew to 152M from 145M last quarter. But more interestingly, there was a 27% drop in bystander reports on tweets that violate the terms of service.
The Takeaway:Spa treatments are expensive... Twitter's quest to glow up came at a price. It posted lower profit than expected, making $119M vs $225M last year. And it's expecting costs to climb further — Twitter's adding 20% more staff this year. But its newly aggressive focus on "health" could set it apart from the rest of social media, and investors are excited for Tokyo 2020 and the US presidential election driving people to Twitter. Oct 31, 2019 Twitter bans political ads — a short-term revenue hit for long-term trust Read More Twitter just banned one of its revenue streams (via tweet)... Bold move. Misinformation (aka lies, false info, and deceptive non-truths) has hit such a level that Twitter's CEO banned political ads on Twitter — his tweet-based announcement also casually trolled Facebook:
For instance, it‘s not credible for us to say: “We’re working hard to stop people from gaming our systems to spread misleading info, buuut if someone pays us to target and force people to see their political ad…well...they can say whatever they want! 😉” -- @Jack
Kill misinformation... (except when it comes to politicians). They're Facebook and Twitter's big exception. Both platforms let political leaders post without fact-checking. Plus, they won't remove/flag tweets/posts from politicians even if they're false.
Zuck's approach: He doesn't want to referee free speech — a politician lying is in-and-of-itself, news, that shouldn't be censored by Facebook.
Jack's approach: But getting paid to expand the reach of misinformation is where Twitter's drawing the line (Facebook isn't into line drawing).The Takeaway:This is straight-up #ShortTermCost cost for #LongTermGain... Jack's leadership on a divisive topic will probably hurt profits before it helps them:
Short-term = lost revenues: Twitter won't snag any of the advertising bonanza of 2020 election campaigns.
Long-term = gained trust/cred: Twitter can now say it's doing more than Facebook to limit the spread of misinformation, whether it's from a politician or not — and that may earn new users. Oct 24, 2019 Twitter stock plummets 21% because of a midlife ad crisis Read More Get CEO Jack Dorsey on a Julia Roberts-style Eat Pray Love vacay... His social network's working through a midlife crisis that dropped shares 21% Thursday. Twitter's 9% rise in revenues and 145M daily active users in the 3rd quarter were trolled by investors. Twitter's somewhat small compared to its social peers:
Snapchat = 210M daily active users
Instagram = 500M humans simply use Stories every day
Facebook = 1.6B daily active users (and it owns Insta)
Noticing more rando tweet ads mid-scroll?... You should. Twitter is pumping out more ads lately. Plus, because of a software bug, you're seeing more of the wrong ads too: Burger lovers might be getting ads about a juice cleanse because of product "bugs." The result? A drop in advertisers buying ad space for next quarter.The Takeaway:Don’t forget the "media" in social media... Even though Twitter sends out cutting-edge tech vibes, its business model is just like your old school local weekly gazette newspaper: Ads. 85% of Twitter's revenues come from ads (the other 15% is mostly data licensing). And if Twitter's ad software isn't working, more ads won't solve it.