Twitter’s Q1 earnings call was a bit of a nightmare. The company missed revenue expectations and lowered its 2015 guidance, and as a result, the stock tanked.
Twitter’s New Ad Units Are Now Available to All Advertisers
Twitter takes the training wheels off direct response ads.
Anthony Quintano for Re/code
And it all came back to one specific reason: The company’s new direct response ads, which are now available to all of Twitter’s advertisers after nearly 10 months in beta.
Twitter CFO Anthony Noto blamed the financial woes on this new ad unit, which Twitter has been testing since last fall. Direct response ads aren’t the only kind of ad Twitter sells, but they are a new offering where marketers are only charged for a specific, desired result — like an app install or a website visit. Twitter had previously been charging these marketers for other engagement metrics like favorites and retweets as well.
The new ads didn’t perform as well as Twitter expected. The result was a revenue miss and lowered expectations for the rest of the year.
Those ads are no longer just a test for Twitter. They’re available to all of Twitter’s global advertisers beginning Wednesday, and it’s an important step. The company believes these ads will ultimately increase revenue since advertisers are only charged for things that are valuable to them. Once marketers see how beneficial the direct response ads are, they’ll spend more money on them. At least that’s the hope.
This article originally appeared on Recode.net.
