Twitter covets Facebook-like scale: Can it succeed?
The key takeaway message from Twitter?s first earnings conference call yesterday was clear: The social network wants to build a broader, more frequent user base and will invest accordingly to try to make this happen.
While Twitter?s monetization strategy appears to be working - advertising revenue was up 121 percent during the fourth quarter ? a significant challenge in attracting advertisers is that Twitter has a much smaller user base than Facebook. Twitter also posted a significantly bigger-than-expected net loss of $511 million, sending its stock value down yesterday afternoon.
?With confidence in our ability to scale revenue, we are doubling down in 2014 to accelerate the growth of our core user base,? said Dick Costolo, CEO of Twitter, San Francisco, in a conference call with analysts to discuss the results.
?By bringing the content of Twitter forward and pushing the scaffolding of the language of Twitter to the background, we can increase high quality interactions and make it more likely that new or casual users will find the service as indispensible as our existing core users do now,? he said.
?We took initial steps in that direction with the introduction of media forward timelines and inline social actions in October and we are already seeing signs that those initiatives are working well. For example, user interaction in the form of favorites and retweets is up more than 35 percent since launching these features in Q4.?
Enhancing the user experience
Several recent enhancements to Twitter are resonating with users, according to Mr. Costolo.
For example, putting direct messaging front and center in Twitter?s apps is driving increased interaction, with messaging up over 25 percent.
Search has also become one of Twitter?s fastest growing feature, with a 120 percent crease in total searches.
Going forward, Twitter will continue to roll out improvements designed to drive user growth and retention. These will include native mobile sign up, methods for engaging inactive users, features that enhance Twitter as a conversational tool and organizing content along topical lines rather than just chronological lines.
Twitter will also invest in making the platform more visually engaging as another way to broaden its appeal.
?We believe that the integration of richer media experiences will help make Twitter more acceptable to a broader audience,? Mr. Costolo said.
Twitter reported yesterday that its revenue for the fourth quarter ended Dec. 31, 2013, totaled $243 million, up 116 percent from a year earlier.
The number of mobile monthly active users on Twitter totaled 184 million, up 37 percent and representing 76 percent of total monthly active users.
The results show that Twitter is getting more views, with Timeline views totaling 148 billion, up 26 percent.
Twitter?s mobile advertising revenue was more than 75 percent of overall advertising revenue, which was up 121 percent for a total of $220 million.
Twitter is also driving more value from its advertising, with the revenue per thousand timeline views reaching $1.49, up 76 percent from the previous year.
While Twitter's user base is growing, it is still significantly smaller than Facebook?s, which reported last week that it has 945 million monthly active users on mobile and 556 million daily active users on mobile.
While Twitter users are very loyal, it has struggled to reach a broader audience, something the company hopes to address going forward.
?Unlike something like Facebook, which is ubiquitous and people get how to use it, Twitter can still come across as finicky to people,? said Roger Katz, CEO of Friend2Friend, New York. ?How many people create an account and do very little tweeting?
?Twitter needs to figure out to become more mainstream, how tweeting, retweeting, direct messaging, all the functionality that still comes across like an inside club, how they smooth that out in terms of the user experience to make it more innate for people,? he said.
If Twitter is successful at reaching a broader audience, its important role in driving conversations with real-time relevance about what is happening in the world could grow.
For example, during the recent Super Bowl game, there was a lot of activity on Twitter, including around branding opportunities for marketers.
?With nearly 25 million tweets from the Super Bowl, the second screen social activity was embraced by both users and brands newsjacking in real time,? said Jay Hawkinson, Chicago-based senior vice president of emerging products for SIM Partners.
?It didn't matter that the game itself was a lopsided affair; people were still tweeting,? he said. ?I expect we will see even more of brands experimenting in real-time based on the buzz generated not to mention the tremendous success of the Esurance campaign.?
Other than growing its user base, another challenge Twitter faces is developing unique mobile ad products.
Twitter made a very significant investment in mobile ad exchange MoPub just prior to going public last year, reflecting the significance Twitter is placing on mobile as a source of future revenue growth.
?There's just so much emerging noise in mobile, so many advertising products that are at root very similar, that long-term success here will be driven by pushing the boundaries of what's possible technologically and harnessing the full power of mobile devices and connectivity,? said George Manas, director of client strategy and development at Resolution Media, Chicago.
?And I think Twitter is really well positioned for innovation of this kind, especially if you consider their prime place at the intersection of digital, local, social, and personal,? he said.
Chantal Tode is associate editor on Mobile Marketer, New York