Tech News - Twitter was forced to cut prices for its new "direct response" ads, Chief Executive Officer Dick Costolo said on Tuesday after a the company issued a revenue warning for the year. Twitter shares fell 8.9 percent on Wednesday after dropping as much as 24 percent on Tuesday.
The ads, designed to get readers to click links to download an app or go to a company's web site, failed to deliver as promised. As a result, Twitter cut ad rates, impacting quarterly revenue by $4 million to $5 million, Costolo said.
"I don't think Twitter will realize its potential without being able to show advertisers more specifically what their performance on advertising is," said Colin Sebastian, senior analyst at Robert W. Baird & Co, who said the company's new deals show its willingness to adapt to advertisers' requests. "Twitter is a work in progress and clearly there's plenty of work left to do."
Twitter delivered disappointing first-quarter earnings on Tuesday, which were reported an hour early by financial data platform Selerity and sent the stock plummeting.
But it was not just the leak that traders punished. The San Francisco-based company also missed Wall Street revenue estimates by nearly $20 million, according to Thomson Reuters I/B/E/S data. It recorded $436 million in revenue and said its key measure of monthly active user had slowed.
Key to improving advertising will be measuring who clicks on what. Costolo said a new partnership with Google's online advertisement service DoubleClick and the acquisition of marketing technology company TellApart, would help advertisers measure ad views, clicks and calculate investment returns.
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