Households with Twitter users were twice as likely to buy a new car as the average US household, the social network company said in a blog post. Twitter, which is eyeing a larger chunk of the $15 billion auto ad market, said that around 6 percent of households with Twitter users bought a new car during a six-month period measured by partner Datalogix Inc. in 2013.
The car-buying data "moves the conversation from 'why Twitter?' to 'how should we use Twitter?'" remarked Jeffrey Graham, ad research director at Twitter. "The measurement shows that Twitter works and there's a huge opportunity there." Twitter chief executive Dick Costolo is concentrating on undoing a slowdown in user growth that prompted a 24-percent drop in Twitter shares the day after its first earnings report.
Brian Wieser, an analyst at Pivotal Research Group, remarked that a more significant gauge to monitor is Twitter’s advertising revenue given the "tremendously under-developed potential for monetization" of the platform. "We have always held that Twitter as it stands is a niche medium," Wieser wrote in a Feb. 5 research note.
He said that it doesn't mean that Twitter doesn't retain significant value for advertisers at its current scale. Data compiled by Bloomberg show that sales of advertising services more than doubled in the fourth quarter of 2013 to $220 million, accounting for 91 percent of the company’s $243 million revenue. Twitter generates over 85 percent of revenue via third parties paying to promote their tweets or accounts.
Carmakers and dealers comprise the biggest category of US advertising spending as tracked by Kantar Media. Researchers found out that expenditure on automotive ads reached $15.4 billion in 2012 and surged 2.3 percent in the first nine months of 2013 to almost $11 billion. The study found out that Twitter users who click, retweet, reply or favorite an auto advertisers' promoted tweet were 32 percent more likely to buy a new vehicle than the average Twitter user.