It wasn’t a single meeting, an internal white paper or a blinding epiphany. Instead, it was a gradual realization — and a need for a life preserver— that led Twitter’s leadership to expand the definition of a “Twitter active user” beyond people who, um, use Twitter.
“I would say that in the middle of last year — maybe April or May — I started talking a lot internally about how we’ve got to do a better job of organizing content experiences for people who don’t log into Twitter, but see Twitter content all the time,” says CEO Dick Costolo.
Over the next few months, Costolo and crew crafted a theoretical construct that would increase Twitter’s audience without enlisting a single new user, envisioning a set of Dante-esque “concentric circles.” The bullseye of this target is the 284 million signed-in, monthly active Twitter users. In the circle around that we find people who come across Twitter but are not logged in — perhaps twice as many as in the inner circle. In another outside band are people who come across tweets embedded in blogs and news articles, as well as Promoted Tweets (Twitter ads), which may find their way onto properties beyond Twitter. “We think about everything we do in the context of this set of geometrically concentric circles,” said Costolo in an October 2014 earnings call.
Underlying that shift was a determination that the surprisingly successfulbusiness side of the company should not be held back by the company’s excruciatingly slow user growth. “There wasn’t a big metric that we looked at where it flipped one day and we’re like, aha! “ says Adam Bain, the company’s president of global revenue. “It was more a realization that all big monetization platforms are constantly looking to spread [outside their platforms]. Our point of view is that we have a superior mobile monetization unit and it could do more than even what we were doing inside of Twitter.”
Indeed, the Twitter-beyond-Twitter market is potentially huge — the company claims that in the third quarter of 2014, around 185 billion tweets were seen outside of the service (on other Web sites, print, television and even billboards). But can Twitter make money from all those tweets in the wild? Stock analysts like Richard Greenfield of BTIG Research, who last year published a blog item noting that “Off-Twitter” Monthly Active Users were growing ten times the rate of signed-in users, is skeptical. “I don’t understand how they monetize those Off-Twitter users!” he says.
But that’s exactly what Twitter plans to do. Just this week, for example, it announced the first syndication of Promoted Tweets, the ad system familiar to people who actually visit their Twitter timelines. Users of Flipboard and Yahoo Japan will be exposed to those ads, which will work just like the ones On-Twitter, except they might appear in the format of the new venue. (Flipboard already shows tweets in its own formalized style.)
The Off-Twitter strategy — which one might refer to as Stage Two of Twitternomics— is a classic instance of a “Got lemons? Make Lemonade!” gambit. Google has often been referred to as a “one-trick pony,” with almost all its revenues coming from its wildly successful search ads. Because Twitter’s successful ad product is limited by the service’s relatively low user base, the company needs to develop multiple tricks for its pony, which isn’t as big as Google’s to begin with. The would-be engines for this growth are three businesses being built to serve both an internal and extended Twittersphere.
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