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GLUED TO OUR PHONES

The pandemic slowed down, but Twitter and Snapchat did not

Aly Song/Reuters
We're still glued to our phones.
  • Scott Nover
By Scott Nover

Emerging tech reporter

Published

The pandemic was a boon for social media platforms. Virtual worlds served their users well when the physical world became less hospitable. But as Covid-19 cases fell this spring in the US and much of the world, the pandemic’s effects on our social media usage did not reverse, according to recent earnings reports.

Snapchat and Twitter, two stock market darlings over the last year, have seen their stock prices triple since last March. After posting impressive second-quarter earnings results on July 22, neither show any signs of losing altitude.  Snap and Twitter saw their stock prices rise 15% and 5%, respectively, in after-hours trading.

Snapchat led the way. Quarterly revenues, driven largely by advertiser demand and product improvements, rose 116% year-over-year to $982 million. Snapchat’s user base rose 23% to 293 million daily active users compared to the some period a year ago. Twitter saw similar gains as quarterly revenue rose 74% to $1.19 billion and monetizable daily active users rose 11% to 206 million over the same period.

Some of this, as Twitter noted in its shareholder letter, reflects a slowdown in advertiser activity last June amid the pandemic and the protests over George Floyd’s murder, slightly inflating year-over-year numbers. But more so, these numbers show that an easing pandemic isn’t slowing down these companies’ growth.

Keeping people engaged

For Snap and Twitter, which each make money primarily by serving its users ads, the key to success is keeping users engaged and on the platform.

To do that, Snap has rolled out a bevy of new products in recent years, including original shows, an interactive map, and tons of augmented reality. Ever since Facebook stole the “Snapchat Stories” feature (a vertical photo or video that disappears in 24 hours), and mastered the formula on Instagram, Snap has responded by building a comprehensive ecosystem designed to keep users engaged. It even stole a bit itself, debuting the TikTok-inspired Spotlight, which grew to around 180 million unique users this quarter. (For what it’s worth, Snap reported that fewer users are posting Stories and viewing their friends’ Stories, so perhaps that spells future trouble for Instagram.)

The challenge for Snap, which has a massive audience, is profiting off of that user base. The future, according to CEO Evan Spiegel, includes “reimagining the shopping experience” (pdf) with augmented reality and e-commerce including AR-enabled clothing and cosmetic try-ons.

Twitter also seems to have averted another potential crisis in usage. A primary source for political chatter and news, Twitter clearly has not seen declining activity stemming from former President Donald Trump’s political defeat and forcible removal from its platform — as well as practically all social media. While the news media world has felt a precipitous fall in traffic since the election, Twitter seems to have avoided it for now.

Apple’s plot twist 

Both platforms averted a potential revenue hit when Apple allowed iPhone users to limit how advertisers track and target them.

The tech giant introduced a fundamental change in May by giving iPhone users the choice to opt-in (rather than opt-out) of tracking outside of a given app (The apps you use can still track you within the app). That was seen as a threat to digital advertisers reliant on user data to sell effective advertising on platforms like Snap and Twitter. According to one report, only 10% of users have opted in to allow apps to track them.

So far, the two platforms have not reported serious disruption, although it may be too early to tell.  Twitter said it only saw “modest impact” from the changes, which went into effect with iOS 14.5 in May and Snap said the full effects might not be evident for months.

But most social platforms are reducing their reliance on advertising: Twitter is introducing new subscription and tipping products and Snap is focusing on e-commerce opportunities. For now, it seems, user and advertiser behavior don’t foreshadow serious revenue trouble. So far, we are all still glued to our phones and advertisers still want to reach us where we are. That means good business for social media companies.

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