Shira Ovide is a Bloomberg Gadfly columnist covering technology. She previously was a reporter for the Wall Street Journal.

Twitter has had one glaring problem for a long time: Signing up new users. More recently, it added a second glaring problem as revenue growth downshifted from perky to disappointing. 

And the slowdown is even worse than it appears after isolating only the most valuable corner of Twitter's advertising.

Twitter's total tally from selling ads rose 37 percent in the first quarter compared with figures in the period a year earlier. It was the seventh consecutive quarter of slowing revenue growth, and the disclosure last month sparked the latest of many sell-offs in Twitter's stock. The company's shares are about half the price at which Twitter sold stock in its 2013 IPO. 

But the crucial category of video or text ads that appear on Twitter itself, or on other digital properties it owns -- including live-video app Periscope and the looping video app Vine -- was up a decidedly less-frothy 23 percent. 

As recently as a year ago, Twitter's ad growth on its "owned-and-operated," or O&O, digital properties was increasing 68 percent year-over-year. The O&O ad sales slowdown was one reason that Michael Nathanson, an analyst with MoffettNathanson, recommended on Tuesday that stockholders sell Twitter's shares.

Less Than Meets the Eye
Twitter's revenue growth from the most valuable ads -- those it sells on its own websites and apps -- has been slowing more than the company's overall sales
Source: Twitter and MoffettNathanson estimates
Note: Twitter in 3Q 2015 started disclosing its ad sales for owned digital properties.

Advertising growth for Twitter's owned properties is a metric Twitter started disclosing only last fall. Notably, Google also makes a point of highlighting ad sales on its O&O properties such as, YouTube, Gmail and the Google Play app store. Google, Facebook and Twitter have been expanding their abilities to sell ads all over the Web and on smartphones, not only on the properties they control. Nevertheless, ads sold on their own real estate are important because they tend to have higher operating margins than ads for which the companies essentially act as brokers. 

It's not a great sign that growth in the ads Twitter sells on its owned digital properties is barely better than the comparable ad sales growth at Google, whose O&O ad sales are 30 times those at Twitter.  

Mind the Gap
Twitter's rate of growth from ads its sells on its owned-and-operated properties is approaching that of Google -- which has 30 times the ad sales of Twitter
Source: Bloomberg, Twitter and MoffettNathanson estimates

It's no surprise that Twitter's long-standing inability to lure more people to tweet would start to hit the company's revenue eventually. It's a credit to Twitter's ad sales team that such a slowdown didn't happen years ago. "We always need to work with a platform that’s growing because our clients always need new customers," a major advertising buyer told my Bloomberg News colleagues Sarah Frier and Joshua Brustein for an article in January. 

If Twitter wants to break into the digital advertising big leagues occupied by Google and Facebook, the company must sell ads on and off Twitter and help marketers measure how well their pitches work everywhere they appear.

Anthony Noto, Twitter's chief financial officer, told analysts last month that Twitter wanted to increase sales of all types of ads, whether they are shown to users scrolling through Twitter or to people who run across tweets with ads on other websites. "Our goal is to be a one-stop shop for advertising," Noto said. 

Still, the O&O problem is another sign that Twitter is losing its touch with the Mad Men of the marketing world, who have a growing number of spots eager for money to pitch their cars, pharmaceuticals and phone contracts. Google and Facebook together collect about 43 cents of each dollar spent on digital ads worldwide, according to eMarketer .

A big crowd, including Twitter, is struggling to grab the scraps that the Google-Facebook duopoly leaves behind. Twitter's difficulties at home don't bode well for its ability to compete.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Note that Google and Facebook dominate digital advertising even though neither is a major ad seller in China, which is home to the most Internet users in the world. 

To contact the author of this story:
Shira Ovide in New York at

To contact the editor responsible for this story:
Daniel Niemi at