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Google Inc's New Twitter Feature Is a Win-Win

By Adam Levy – May 27, 2015 at 8:42PM

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Twitter is back on Google. #Good.

An example of tweets in Google results. Source: Twitter.

Back when Twitter (TWTR) announced it had reached a deal with Google (GOOG -0.21%) (GOOGL -0.29%) to put tweets in Google search results, the news received a mixed reaction. Twitter's return to Google after a four-year absence would increase its exposure across the web, but at the same time, it could decrease its ability to monetize and control its content.

The deal went into effect this week as Google launched embedded Twitter results in its Search app for iOS and Android. With more concrete details on how Twitter results in Google work, we can better analyze the risks and opportunities associated with the deal signed earlier this year.

How does this whole thing work?
Google isn't just including occasional tweets in its search results; it's featuring Twitter's content with a full carousel of tweets when a user searches for things like celebrities or specific hashtags. Users will be able to peruse a few tweets -- Google likes to feature ones with images -- and there's often a link to view more related tweets on Twitter.

This is excellent for Twitter. The carousel is often at the top of the page, an area Google typically reserves for its own services. Additionally, while Google provides links to individual tweets, it also features a link to Twitter's own search results, which are much more easily monetized by Twitter.

Twitter is still missing the automatic redirect it initially detailed, which would send logged-out visitors to its revamped homepage. Whether it ran into complications with Google or is waiting for more feedback is unclear.

Still, the link to Twitter's search results page mitigates the risk that Twitter won't be able to monetize the additional engagement it receives from Google search results. The exposure on Google also reiterates the quality content on Twitter available to existing users, and acts as free advertising (actually, Google is paying Twitter a licensing fee) for its content to non-users.

For Google, the benefits are pretty clear-cut. It bolsters its ability to provide real-time search results, something it's fallen behind in after the failure of Google+ to attract a widely engaged audience, and Bing partnered with both Twitter and Facebook. The result should be a better search experience and a lower abandonment rate from users switching to a competitor like Bing.

The firehose licensing deal Twitter made with Google cedes a lot of control to Google in how Twitter's content is presented and linked to from Google. The risk that Google will bury results below its own services or stop linking to more monetizable pages for Twitter still exists. But investors should keep in mind that risk only decreases the upside and doesn't present a huge downside. The downside risk comes from people opting to use Google search instead of Twitter search to surface content, which seems unlikely despite the excellent presentation from Google.

Google's other partnership with Twitter encourages it to play nice
Another factor that reduces Twitter's risk involved with ceding control to Google is that the two companies just announced another partnership. Advertisers using Google's DoubleClick Bid Manager will have access to Twitter's ad inventory. It also enables advertisers using Twitter's platform to gain valuable analytics data from Google on how their ads convert in relation to other ads bought through DoubleClick. This is valuable insight for advertisers, which could potentially lead to more bidders for Twitter's ads.

Google, meanwhile, benefits from the partnership by increasing and diversifying the inventory available to its advertising partners. This gives it an interest in increasing exposure to Twitter's advertisements, since it gets a piece of the revenue.

As Twitter's and Google's interests become more aligned, Twitter stands to benefit from Google's ability to reach a huge audience compared to its own. Google gains the real-time data from Twitter, which fills a significant hole in its own product. And both gain advertising revenue. So, while Google holds a lot of the cards in this new relationship, it's more likely to play nice than to undermine Twitter's value.

Adam Levy has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google (A shares), Google (C shares), and Twitter. The Motley Fool owns shares of Facebook, Google (A shares), Google (C shares), and Twitter. 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.

Stocks Mentioned

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Alphabet Stock Quote
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Meta Platforms Stock Quote
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$116.80 (1.27%) $1.47

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