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Twitter is Losing Active Users Resulting in Declining Interest of Advertisers

Industry: Internet Services; Social Media
Current: Company Performance

Twitters “Heavy Users” account for 90% of tweets and create 90% of twitter’s revenue
Twitter has seen a sharp decline in heavy users and is struggling to retain active users post-pandemic
Shifting interest of users toward cryptocurrency, nudity & pornography is making the platform less appealing for advertisers

Twitter Generates Significant Share of Its Revenue from Advertising

Third-party advertising on Twitter currently accounts for the majority of its revenue. Furthermore, the advertisers who are currently promoting their products have no long-term commitment to the company. The continuous loss of influential people & users from Twitter will take away the platform’s attractiveness for promotions, resulting in revenue loss for the company. Twitter's ad effectiveness fell in 2021, with ad engagement falling to -12% in the fourth quarter of 2021, from 6% in the third quarter.

Declining Interest of User in News, Sports & Entertainment Content

Twitter is among the few social platforms approving nudity in its platform. Users have shown a trend of declining interest in general topics such as news, sports, and entertainment. Twitter's trending topics include cryptocurrency, nudity, and pornography, which are tarnishing the platform's image. Around 13% of twitter’s content constitutes adult content. Additionally, a few instances of child pornography on the platform have drawn criticism from users. These factors further contributed to the weakening image of the platform, resulting in the withdrawal of ads from major brands including Dyson, PBS Kids, and Forbes.

Twitter May Miss Out on Expanding Opportunities in the Global Online Advertising Market

According to GlobalData, the online advertising market is expected to reach $407.24 billion by 2022. Based on the current trend of ad withdrawals from Twitter, the company may lose access to the lucrative online advertising market.

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