Twitter cleanup sweeps away 9 million users, but ad sales up

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CEO Jack Dorsey says the company has made steady progress on its
CEO Jack Dorsey says the company has made steady progress on its "health initiatives."  Credit: Bloomberg

Twitter's audience is down by 9 million people, but that's good for advertisers.

On Thursday, the media messaging app released its third-quarter results which showed a monthly active user base of 326 million people, down from 335 million in the prior quarter. However, that's what Twitter's advertisers and investors were expecting since the company has been focused on purging bad actors, harassers and fraud accounts.

"We continue to make really steady progress against some of the health initiatives that we're seeing," said Jack Dorsey, Twitter CEO, during an early morning call with Wall Street analysts.

The "health initiatives" are Twitter's attempts to make the service less toxic and make people feel safer, resulting in fewer angry encounters while also eliminating spam accounts. Automated bots, after all, don't help brands sell products.

Despite the decline in users, ad sales were up 29 percent year over year to $650 million, with ad revenue in the U.S. increasing the most, 32 percent year over year.

"The bigger issue with Twitter is they could see reduced usage," said Brian Wieser, senior analyst with Pivotal. "But if that's occurring while attempting to improve the quality of usage, eliminate trolls, eliminate trolling, eliminate hateful users, that might have a negative impact on the numbers, but it helps the business for the long term."

Twitter, like its rivals Facebook and Google, which owns YouTube, is reacting to the problems that were highlighted during the 2016 U.S. presidential election. The platforms were flooded by fake accounts, created mainly by Russian agents, many of whom bought ads to spread disinformation. There has since been a crackdown on fraudulent accounts, an implementation of greater controls around buying political ads, and stricter enforcement around abuse and misinformation.

Twitter has said that the "health initiatives" will help advertisers in the long term see better results from campaigns and increase their confidence in the platform. In July, for instance, Twitter ejected millions of inactive accounts, ones that wouldn't have shown up in its official metrics because they were inactive, but that were artificially boosting follower numbers. Follower numbers can influence advertising decisions when brands are looking to work with people in part based on how many people they reach.

Last quarter, Twitter also joined Facebook and YouTube in kicking off Alex Jones, the far-right personality who has been associated with spreading conspiracies online.

Dorsey said he huddled with Twitter's top advertisers during New York's Advertising Week in September to discuss the cleanup efforts.

"We think the most important thing for us to do is be transparent around what we're seeing on the service," Dorsey said on Thursday.

Dorsey highlighted two brands that he said showed the value of marketing on Twitter. McDonald's and Lean Cuisine both used the service to promote new campaigns last quarter.

"McDonald's in France was a really good one," Dorsey said. "They actually discovered a bunch of feedback on Twitter."

McDonald's was promoting potato wedges and saw people on Twitter discussing how they preferred a combination of the new menu item and the classic french fries, Dorsey said. It's the type of marketing Twitter wants to own--product launches backed by the platform's ability to gauge the public mood.

"That's one of our core jobs for advertisers," Dorsey said.

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