This week one of the world's most famous media properties will likely announce its 44th consecutive quarterly loss. Twitter loses money because it doesn't show marketers their ad dollars lead to business outcomes.
Twitter should profit from its large audience and reach. More than 300 million people use Twitter every month; more than a billion see Twitter content online. World leaders' tweets make global headlines. Still the company lost $457 million in 2016.
Analysts (including me) have blamed Twitter's troubles on stalling user growth and a lack of product innovation. Both hurt, but neither is the company's biggest problem.
Twitter's biggest problem is it can't show brands their ads made an impact.
CMOs choose between hundreds of channels. Each must prove its ability to drive business. But when I studied the "key results" featured in 50 recent Twitter-published case studies I found the company still focuses on measuring engagement, followers, and other ephemeral data.
How does Twitter define marketing success?
- It focuses heavily on digital and social metrics. More than two-thirds of Twitter's case studies feature digital metrics. For instance, Heineken emphasizes online impressions while Comedy Central highlights mobile app installs. Nearly as many spotlight social metrics: Coke prioritizes engagement rate and SAP focuses on mentions.
- It rarely features real business metrics. Just one-quarter of Twitter's case studies highlight business outcomes. For instance, Dove measures sales and Lyft spotlights cost-per-acquisition. Amazingly, Twitter's case studies still count followers as often as they feature sales or revenue data.
Sources at Twitter tell me CMO Leslie Berland wants to feature more brand-friendly metrics. Recent case studies highlight more digital data and less social data. But until Twitter show marketers success with business outcomes it'll keep losing money.
Want to learn more about how Twitter (and Facebook, Instagram, Pinterest, and Snap) measure and explain marketing success? Simply Measured is offering free copies of my report "Measure Like The Social Networks Do."