Motley Fool
0
All posts from Motley Fool
Motley Fool in Motley Fool,

Twitter's Changing Its Policy for Political Ads. Here's What You Need to Know

This week Twitter (NYSE: TWTR) announced new requirements for all of its advertising but focused specifically on some changes for its political ads. The changes come in the wake of revelations that Russia meddled in the U.S. election, in part, by purchasing ads on Facebook (NASDAQ: FB) and Alphabet's Google, and by creating fake accounts on Twitter.

The company said in a

that it would launch a new "transparency center" in the coming weeks which will show users, "who is advertising on Twitter, details behind those ads, and tools to share your feedback with us." 

The changes come as a bipartisan bill, called the Honest Ads Act legislation, was proposed by some members of the Senate and Congress just last week.

Image source: Getty Images.

Twitter's new ad policies

The company said the new transparency center will show all of the ads currently running on Twitter, how long they've been running, and which ad creative is associated with them. It will also shed some light on which ads are targeted toward each user and the information that's being used to determine that ad targeting.

Twitter also said that it'll let users report ads they feel are inappropriate or give negative feedback about them, even if the ads they're reporting aren't specifically targeted toward them.

Even more importantly, Twitter went into detail about changes it's making to political ads on its platform. 

The company said in the post that:

To make it clear when you are seeing or engaging with an electioneering ad, we will now require that electioneering advertisers identify their campaigns as such. We will also change the look and feel of these ads and include a visual political ad indicator.

An "electioneering ad" is an official term used by the Federal Election Commission (FEC) for political ads, and includes advertisements that are for a political candidate or party, targeted to the electorate, and distributed within a timeframe ranging between 30 to 60 days out from an election.

Here's an example of what Twitter says one of its political ads may look like:

Image source: Twitter.

In addition to the new rules for all ads, Twitter will add these new guidelines and rules for electioneering ads:

  • Have to provide transparency about the identity of the organization funding the campaign.
  • Will include details on targeting demographics, such as age, gender, and geography.
  • Will provide historical data about all electioneering ad spending by the advertiser.

The company said it will also be more strict about who can serve electioneering ads, limit how they're targeted, require advertisers to self-identify as political advertisers, and will add stricter penalties to advertisers who don't comply with the new rules.

Facebook is changing ads too

Twitter's ad changes come after Facebook said it will overhaul its own political ad policies as well. The social media leader will now allow any user to see political ads, even if they aren't targeted specifically them, and will also require advertisers to show who is paying for the ads.

Facebook has received the majority of the attention in the wake of Russia's meddling in the U.S. election because $100,000 worth of political ads -- totaling about 3,000 ads -- was spent on its platform during the election season.

What's going on with Twitter ads

It's been a rough year for Twitter's advertising, to say the least. The company makes about 85% of its top line from ad sales, and in the first quarter of this year, ad revenue fell by 11% year over year, followed by an 8% drop in the second quarter.

To make matters worse, Twitter said in its second-quarter earnings investor presentation that it doesn't expect to see its total revenue growth rate improve for the second half of the year because of headwinds from "de-emphasized revenue products."

We'll find out more about how Twitter's ads are performing when the company reports its third quarter 2017 earnings later this week, but the above comment certainly doesn't instill much confidence that Twitter is expecting a strong quarter.

Just how much the new political ad changes will affect Twitter's overall advertising business is still an unknown. But what is clear is that Twitter is still struggling to build out strong ad revenues and diverting more attention, employees, and resources to managing political ads isn't great news for the company or its investors. Sure, Twitter should be doing its part to curb bad political advertising players on its platform -- but the timing for the company couldn't be worse.

10 stocks we like better than Twitter
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Twitter wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of October 9, 2017

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Facebook, and Twitter. The Motley Fool has a disclosure policy.