Here's How Twitter Is Targeting Future Growth

Learn what Twitter's latest moves reveal about its outlook on growth.

Apr 14, 2014 at 3:00PM

Expansion in the social network market seems like a tough challenge for Twitter (NYSE:TWTR). The company has experienced a stock price drop plus a slowdown in user growth in the past months. So, it's currently focusing on increasing its user base and retention. Yet the heavy competition from Facebook (NASDAQ:FB)and Google (NASDAQ:GOOG) is putting pressure on its plans.

In this competitive context, it recently bought Cover, an Android app designed to show notifications in the locked screen of mobile devices. Cover learns about which apps are used at different locations and times and then uses that information to relevantly offer app shortcuts. In addition, it has been rumored that Twitter is implementing 15 new types of ads in its feed. As it seems, it is aiming strongly at increasing user growth, retention, and monetization.

A challenging growth scenario
A report from Twopcharts, an analytics website, has revealed that Twitter accounts created in recent years are less active than those of early adopters. Moreover, only 13% of its 955 million existing accounts have tweeted in the last month. Overall, the data shows that Twitter has a problem with user retention and engagement.

The social network can be hard to understand by many of its new users. Aware of this, Twitter is working to be more user-friendly and cutting its learning curve. However, this restructuring risks upsetting its longtime fans, who use Twitter because of its unique features. Now, it seems like the company is looking forward to paying for acquisitions and implementing new monetization strategies.

Smart solutions for user growth
The recent acquisition of Cover offers a variety of possibilities for expansion. The app could be used as a way to create a product similar to Facebook Home, in which the social network gives access to posts and notifications through the locked screen of the smartphone. However, given Cover's strengths on learning about a customer's habits, the acquisition could imply a very different thing.

Cover can provide Twitter with useful information about when and where smartphone users enter the social network. With the data, Twitter could improve advertisements by offering them at the most relevant time and place, maximizing its monetization potential. It can also filter which notifications to prioritize for exposure in the locked screen, making it much friendlier with users. In that way, the move could lead to more user retention, since users can be more exposed to Twitter at the most convenient times and so become engaged to the social network. Moreover, it is possible that these people will invite others to follow them on Twitter, which contributes to even more user growth.

Introducing app-install ads
One of the 15 new types of ads in Twitter's feed is the app-install advertisement. This type of ad has been quite successful for Facebook, and it seems like Twitter is working to make its version as efficient as possible. If the ads are launched adequately and are relevant according to the user's demographics, the company can significantly increase its revenue. Consequently, a better top line can move it closer toward justifying its market value.

Behind major competitors
Twitter is still behind tech giant Google. Its Google+ has grown considerably in the past few years. In its Q4 2013 results, it had 1.15 billion registered users and 359 million monthly active users. The numbers show that Google+ is not doing very well with user engagement. Still, Google aims to make its social network useful through its other services like Gmail or Youtube. So, some users can find it more comfortable to stick to a Google-only platform.

A bigger competitor is Facebook, which enjoys success in both top and bottom lines consistently. This social network is currently the largest, with 1.2 billion users. This year, it has invested aggressively in new expansion projects. After its $19 billion acquisition of Whatsapp, it has gained access to the application's 450 million users. Facebook also bought Oculus VR a few weeks ago for $2 billion, entering a new world of hardware and opening up possibilities to offer a more differentiated service in the future. 

Twitter is making moves that could lighten its growth issues. Its acquisition of Cover opens up several possibilities for business expansion. The application offers data that can be useful to improve targeting in advertisements and exposing users to the social network at the right time and place. As a result, it can increase its monetization and user retention. Also, the rumored app install ads can lead Twitter to improve its top line. So far, the company falls behind Google+ and Facebook, which boast impressive growth and strong financials. That being said, Twitter's move can push it ahead in the market and make it a stronger contender.

6 stock picks poised for incredible growth
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Alvaro Campos has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Facebook and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers