Quartz gleaned some data from Twitter’s annual report to note that ad rates on the company’s website and mobile apps fell 18 percent in the last quarter of 2013. Total ad revenue grew during the quarter as the overall number of ads increased, Quartz noted, but the drop in rates extends a slide that has lasted for at least two years.
Twitter claims that the steady decline is directly attributable to increasing inventory, which makes sense, and that those low rates are attractive to smaller businesses and international advertisers. But as Quartz notes, the continued slide shows no sign of reversing, and Twitter’s ad rates have yet to demonstrate any real stability.
I think Twitter’s biggest problem in monetizing all that inventory — particularly in mobile — is a lack of highly targeted ads. That isn’t exactly unique, of course; even established online websites continue to have big problems in presenting the right ads to the right users (not to mention at the right time and place).
The key to delivering those targeted ads, of course, is data — the stuff that helps advertisers identify precisely the consumers they want to approach, and then measure how well their campaigns are performing. Twitter picked up a major asset in that area last fall when it spent $350 million to acquire MoPub, an ad network that enables real-time bidding and also tracks consumers’ interests and behaviors. We have yet to see that acquisition have any real impact on Twitter’s ad rates, which is understandable considering the deal didn’t close until until late October. But I fully expect to see that change in 2014.