Twitter’s Average Ad Rates Drop 81% In Two Years

The cost of the average ad on Twitter is falling; data from Twitter’s annual report reveals a drop of 81% overall since Q1 2012 in average ad rates, and a drop of 18% in just the last three months of 2013 (Quartz).  The data includes ads on both Twitter’s website and mobile apps.

This isn’t necessarily bad news for Twitter; total revenue is still growing, with more advertisers buying ads at the lower rates. Twitter claims ad rates are dropping for two reasons: 1) there’s more available space for advertising on the platform and 2) lower rates appeal to both small businesses and international businesses.

Twitter told Quartz that, “As we continue to optimize for advertiser value and the overall user experience, the cost per ad engagement may continue to decline over time, and we expect the cost per ad engagement to decline in the near term.”

However, Quartz notes that if rates continue to drop, the company will need more users — and more ads — to remain successful. What do you think – will Twitter be able to stabilize ad costs?