Twitter’s advertising revenue has been hit hard by the COVID-19 outbreak, and the company said the “civil unrest in the U.S.” in May and June also made matters worse. Twitter said advertising revenue fell 15 percent in the final three weeks of June from a year earlier as brand customers slowed or suspended spending altogether. “As the protests subside, demand will gradually improve once the brand returns,” Twitter said this morning in its second-quarter 2020 earnings report.
Brands are known to have blocked ads from appearing near words such as “Black Lives Matter,” “George Floyd” and “protest.” Meanwhile, several big advertisers, including Starbucks, Unilever and Coca-Cola, suspended advertising on most social media platforms in June. The ad suspension initially focused on concerns about hate groups on Facebook, but they were later expanded to include other platforms.
In addition to “the end of May to mid-June,” Twitter said advertising revenue has been improving since the outbreak began to hit a low in March. Twitter said there had been a “gradual and modest recovery” but not enough to make up for the sharp losses. Twitter’s second-quarter revenue fell 19 percent, pushing the company into a loss again — its second consecutive loss since the end of 2017.
Advertisers have been tightening their budgets as COVID-19 forces consumers, particularly in the U.S., to cut back on spending. That means Twitter’s advertising sales are down, which is its main source of revenue, and, overall quarterly data, is down 23% from the same quarter in 2019.
The more serious problem began last quarter, when a pandemic occurred in the final weeks of Twitter’s financial reporting period. This wiped out expected revenue of $20 million to $80 million, which amounted to a loss compared with all the growth in the previous year. At the time, Twitter said it could not estimate how much revenue it might receive in the second quarter, given the uncertainty surrounding the outbreak.
One bright spot that Twitter highlights is user growth. The company’s daily users grew to 186 million from 166 million in the previous quarter.
At a time when Twitter faces two serious threats, there are also unexpected difficulties: the aftermath of an unprecedented hacking attack earlier this month in which the accounts of many users were hacked. Elliott Management, an activist investor, tried to get Twitter CEO Jack Dorsey to step down earlier this year. While Twitter and Elliott have finally agreed on user growth and revenue targets to keep Dorsey in the lead, Twitter is likely to miss out on revenue targets given the severe impact of the outbreak.