July 27, 2018 By FTI Consulting
Bit hot, isn’t it. Amid fan shortages in Hull, live-streams of pizza cooking in cars, and the earnest think-piece on the psychological effects of a heatwave, however, some companies have been making hay (sorry).
Among this happy summer bunch, none will likely be more happy than Twitter, which saw a 5% surge in share price, its best day since mid-June. We’ll have hit the big red “send” button on this email at FTI HQ by the time Twitter’s actual quarterly earnings call comes out, so you may have to bear with us, but markets are predicting double-digit movement in Twitter share price.
How can we account for Twitter’s enviable 84% surge in 2018? For one, a crackdown on bots, apps and other activity that violates privacy and user rights. Between May and June 143,000 apps were removed for violating spamming or privacy policies, and Twitter scrubbed 70m fake accounts over the same period. This robust, visible battle aside, it’s probably the two consecutive quarters of profit the company has strung together that have got it set for its day in the sun.
“Over a month without hearing what’s going on with Snapchat? I wonder what those guys are up to?” Creating a private marketplace for advertisers offering to sell very specific ad inventory to advertisers, that’s what.
While it’s not quite as eye-grabbing as an 84% share price surge, this is an interesting move that Snap hopes will go some way to reinvigorating their existing ad programme. Previously, organisations buying ad space wouldn’t get much say on where these showed up; now, companies can pick specific slots in specific shows from Snap’s publishing partners, including Buzzfeed, NBC, Vice, and the Daily Mail.
Ever the plucky upstart (albeit a NY-listed, billion-dollar-valued upstart), Snap’s hoping to demonstrate the niche targeting potential of its platform, despite 191m daily users being dwarfed by Facebook’s 1.5bn. Giving advertisers the ability to set their own ad rates, even at a higher price ($10 per thousand impressions compared to $3-5 in public advertising) should help to reinforce this impression of specificity.
For our third platform update of the week, we turn to a challenging few days for Facebook. The share price drop yesterday (the largest one-day drop in US history) reflects investor concern over growth following Wednesday’s earnings call.
Amongst the much talked-about figures suggesting a slowdown in existing market growth, it’s worth highlighting some of the more positive headlines for the business. Instagram’s 177% YoY ad revenue growth, and the fact that Facebook managed to return 24% growth with two of its largest assets, Messenger and Whatsapp, as yet unmonetised, are both reasons for optimisism.
Wednesday saw another challenge for Mark and his team, with a Chinese flipflop on whether Facebook had been granted a license to open an office in Hangzhou. With user growth slowing in the US and Europe, China is the next big market on the expansion list. Much has been written on Zuckerberg’s efforts to court Chinese government (from a Q&A in mandarin to jogging through Tiananmen Square), but his staunch refusal to develop a censor-friendly version for Beijing (as LinkedIn have done, for example) is admirable. Chinese companies remain Facebook’s second-largest ad-buyers after the US, despite the platform being banned on the mainland – and Zuckerberg and team aren’t going to be quitting on expansion plans any time soon.