Friday, July 18, 2014

How Twitter Can REALLY Monetize Its Reach

There was an interesting article in yesterday's WSJ concerning investors' concerns about Twitter as a growth stock.

After a troubling start as a public company, Twitter ... plans to try out some new numbers on Wall Street... When it reports second-quarter earnings on July 29, the San Francisco company is expected to unveil as many as four new metrics that it hopes will illustrate its reach beyond the 255 million users that log in at least once a month, according to people familiar with the matter. The aim: to show Twitter isn't just a diminutive Facebook Inc.

Despite doubling revenue for each of the past five quarters, Twitter's moneymaking successes have been overshadowed by faltering user growth, forcing investors to recalibrate their long-term expectations.

Twitter sizes up its digital town square by the number of users who log into the service at least once a month. That standard industry metric, called monthly active users, and a self-invented measurement called timeline views designed for advertisers to track usage, were the primary nonfinancial metrics offered to potential investors when Twitter went public in November.

But those metrics backfired after the company reported abruptly slowing user growth and signs of a less-engaged audience, sending the stock to new lows and raising unflattering comparisons to Facebook...

I personally don't think stats like monthly active users or timeline views are at all relevant for Twitter.

Think about it: the Twitter platform receives significantly more exposure than Facebook on new media sites like Twitchy and BuzzFeed. These sites embed tweets -- served up by Twitter -- as a key part of unfolding news stories, quite unlike any other social site:

Twitter doesn't appear to be making a cent from serving up content to news sites. The hope with embedded tweets, I suppose, is to convince people that they're missing out if they're not on Twitter. Which they are, of course.

But that said, these embedded tweets are a huge missed opportunity. Consider this hypothetical monetization approach:

Did someone say bacon?

Or perhaps a tweet with "media" (an image):

You may hate ads, but if they're targeted and relatively unobtrusive, the fact is that someone has to pay for your troubling addiction to real-time news. Natch.

Oh, and Twitter: my royalty for this idea is a paltry one percent of gross revenues, in perpetuity.

Hat tip: BadBlue Tech News.

1 comment:

RosalindJ said...

I don't know why they're completely missing the boat on this. Platforms that were built to use Twitter use ads for the free version with offers to remove ads upon purchase of the app. Talk about missing the boat!