60-five per cent of Twitter’s ad revenue comes from mobile advertising, according to the company’s recent S-1 filing. But there are signs Twitter isn’t where it could be in terms of generating mobile revenue on a per-user basis, particularly outside the U.S.
Here’s how Twitter’s mobile ad business stacks up, both relative to its overall ad business and that of its main competitor, Facebook:
- In the second quarter of 2013, 65% of Twitter’s ad revenue came from mobile ads. For comparison, 41% of Facebook’s advertising revenue comes from mobile ads.
- Mobile advertising accounts for just over half (56%) of Twitter’s total revenue
- Facebook generates nearly twice the mobile ad revenue per active user as Twitter. If we divided mobile ad revenue by average mobile monthly active users (MAU) for each company, Facebook generated 80 cents per mobile MAU compared with 48 cents for Twitter.
- Twitter’s own measure of how well it monetizes its usage, revenue per-1,000 timeline views, increased 26% in the three months through June in the U.S., and now stands at $US2.17. Globally, it’s much lower, $US0.30.
Caveats aside, these results are pretty extraordinary considering that Twitter started offering mobile advertising products only a year before.
Twitter’s definition of timeline view means that a view occurs anytime a user refreshes, searches in, or visits their feed on the service, on desktop or mobile.
An important question is whether this metric includes views from third-party apps like Twitterrific, which are popular among heavy Twitter users, as replacements for Twitter’s own app. Jim Prosser, senior manager for communications, confirmed that Twitter’s “timeline views” metric doesn’t include third-party apps.
Why is this important? Because most ads that show up on Twitter do not show up in the feeds of these third-party applications.
That means that Twitter’s gross revenue per-1,000 timeline views would be even lower, if this usage from ad-free third party apps were accounted for.
Already, Twitter said it expects its ad revenue per-1,000 timeline views to be soft in the next few quarters, for two main reasons: Twitter still must accept lower prices for its mobile ad inventory relative to its desktop ads, and because mobile ad prices outside the U.S. are very low.
But in the long-term, Twitter’s heavy mobile emphasis will turn into an advantage as global consumers shift to mobile as their primary Internet-access device and mobile ad prices perk up.
Mobile ads are less expensive because the advertising industry is still trying to figure out mobile, even as users pour in (i.e., supply is skyrocketing, while demand is muted). Eventually, mobile ads will attract more serious spend, especially native mobile ads like Twitter’s, targeted to users’ interests and delivered in-stream.
Facebook’s mobile ad revenue still dwarfs Twitter’s. In the second quarter, Facebook’s mobile ads generated $US655 million. Twitter recorded an eighth of that result, at $78.6 million.
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