Twitter has a slower-growth problem, so CEO Dick Costolo and CFO Anthony Noto attempted to shift attention to the potential of the network’s wider audience during the company’s quarterly earnings call this week.
That audience, which includes people who visit Twitter without logging in and people who view embedded tweets or tweets in widgets on other sites, is giant, they said; one to two times bigger than the 284 million people Twitter counts as monthly active users. Doing the math, that would put Twitter’s total audience in a range between 568 and 852 million.
Investors weren’t impressed, fixating on the fact that Twitter added three million fewer users in the third quarter than the second, despite major efforts to woo new converts, and the stock fell more than 17% this week.
Costolo and Noto made it clear during the call that the company is still focusing hard on increasing its active user base. (Costolo said simplifying the sign-up process — from 12 steps to six or seven — has increased by 13% the number of people who make it to their home timeline after starting the registration process. And that new users are following 200% more accounts.)
But they strongly and repeatedly emphasized the potential of exploiting the larger audience. They didn’t go into specifics but what they — well mostly Noto — did say was illuminating. We pulled some interesting excerpts.
In response to an analyst’s question, Noto defined the different components of the logged-out audience:
The first use case that a logged-out user comes to Twitter is when they do a search on one of the major search engines for a person and that person clicks on hashtag person’s name and they come to Twitter to a profile page. That is the one experience that we’ve actually experimented the most with and enhancing that profile page for the user and I’ll share with you in a second on stats that we’ve seen since that initiative. The second experience is when someone does a general search not on a name, it could be on a topic or it could on an area of interest, they would land just on a Tweet Detail page. No other tweets just that one tweet, no advertising, no merchandizing, no collaborative filtering, just literally that one tweet. The third experience is when someone comes to our Home Page or Application and hasn’t logged in and is looking to probably do a search, but they’re looking for what’s going on right now, they get nothing. They have to log in and many people do not log in and they bounce off of that page. The last experience is when someone sees one of our tweets on one of our syndicated partners like CNN or ESPN and they click on that tweet and come to our Application or our Home Page and that situation again, they’ll get minimal content without logging in and so each one of these used cases is unique opportunity for us to create an experience that’s immersive. It gives the user the value that we have in content in both breadth and depth and brings them into Twitter in a way that they want to come to Twitter and not the way that we historically provided the information or the requirement for them to log in.
Later in the call, an analyst asked whether in three to five years more revenue would come from logged in or logged out users. Noto’s answer:
There’s not a specific answer to your question three to five years from now, but the way I would qualitatively answer it is this, we always have a very large audience and logged out users — it’s 1 to 2 X the size of the monthly active logged in users. And so with a sizeable audience one that we feel confident we can monetize once we’ve nailed the consumer experience and our approach has been to really nail the consumer experience and to have high levels of engagement before introducing advertising. Our advertising team, led by Adam Bain are very much in favor of being able to monetize this universe of users because they come with a very specific intent, especially when they are coming from a search engine or do a search on our own properties or they come from an embedded tweet on someone else’s property. We know what their interest is and that’s a key element of being able to target the advertising for them. So I think your question may be are they monetizable? And our view is yes at the right point they are monetizable, but the exact magnitude differs between one versus the other. We would tell you our goal is to have the largest daily audience in the world and that will drive the largest value for shareholders.
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