The Huge Windfall That Twitter Is Missing Out On

One simple tweak could bring in tons of revenue for Twitter.

Aug 18, 2014 at 12:00PM

Twitter Hq
Twitter is leaving #money on the @table. Source: Twitter.com.

Twitter's (NYSE:TWTR) 271 million monthly active users are in a minority. The majority of Twitter's audience never logs in, according to CEO Dick Costolo.

On Twitter's latest earnings call, Dick Costolo said: "There are hundreds of millions of additional unique visitors who come to Twitter every month, but don't log in. When you consider the combination of monthly active users and unique visitors, the size of our audience on our owned and operated properties is two to three times that of just our monthly active user base."

What's more, Twitter is catering to this unregistered audience, and is missing out on the huge opportunity of advertising to them. Google (NASDAQ:GOOG) (NASDAQ:GOOGL) doesn't require you to log in before it shows you a bunch of ads in its search results. Why should Twitter?

Twitter might be too accessible
Twitter is actively catering to its unregistered users. Last quarter, the company revamped user profiles to make them more appealing to visitors who don't log in. Costolo added, "We will run experiments and continue to run experiments to improve the overall experience for logged-out unique visitors."

Twitter visitors are able to follow trending topics, hashtags, and use Twitter's search feature to find news or people they're interested in, all without logging in. Comparatively, unless you know exactly what you're looking for on Facebook (NASDAQ:FB), you can't access anything without logging in: no search, no popular news, nothing. This drives Facebook's user base up, while most casual Twitter users who just want to follow a hashtag from their favorite TV show can get by without ever registering.

That's not really a problem, though
The real issue here is that Twitter is catering to an audience that it isn't monetizing. While there are merits to this strategy, it's a missed opportunity.

As mentioned, Google doesn't require users to log in before it starts showing them ads. Certainly, it prefers that web searchers log in so it can target advertisements better; but it still makes money on just about every unique visitor. In the early days of Google, users didn't have accounts. As Google has rolled out or acquired more services, it's increased the number of users with accounts, allowing it to personalize search results and improve ad targeting.

Twitter ought to be able to take a page out of Google's book and monetize unregistered visitors. In fact, they're probably easier to monetize than typical timeline viewers for several reasons.

First, visitors who don't log in are using search to find content they're interested in. This is the closest analog to Google, and Twitter can use a similar ad product to allow advertisers to target keywords. For example, someone who's always searching for news on sneakers might be a good target for Foot Locker.

Second, unregistered users are also able to follow hashtags. This is even more targeted than searching, because a hashtag often comes with a specific context. Someone searching for a hashtag from a TV show might see ads from the same companies that advertise during that program.

Finally, these anonymous users are visiting registered users' profiles. It's a safe bet that they have similar interests to the users whose profile they're visiting.

Don't lose focus
Twitter should certainly try to convert visitors into users as much as possible by communicating the benefits of signing up. Currently, you get a message like this: "Not on Twitter? Sign up, tune into the things you care about, and get updates as they happen." There's also a sign-up box that says, "Don't miss any updates from [user x]." These are things people can already do without signing up or logging in, though.

Twitter needs to work on its messaging. Facebook offers users the ability to stay in touch with friends, see their photos, and share what's new by registering. A registered user is worth much more than an unregistered user due to better targeting abilities and stronger engagement.

In the meantime, however, Twitter has an opportunity to easily monetize those visitors who aren't logging in.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Adam Levy owns shares of Apple. The Motley Fool recommends Apple, Facebook, Google (A shares), Google (C shares), and Twitter. The Motley Fool owns shares of Apple, Facebook, Google (A shares), 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