During Twitter's (NYSE:TWTR) second-quarter earnings call in late July, interim CEO Jack Dorsey identified three areas of focus. The third of these areas is communicating the value of Twitter, and answering the question "Why Twitter?"
Earlier this year, CFO Anthony Noto was charged with heading up the company's marketing, and the company has since made plans to develop a full-fledged marketing campaign across digital media and television. Ad Age recently interviewed Noto about Twitter's upcoming marketing campaign and its search for a full-time chief marketing officer.
During the interview, Noto couldn't give a very good answer to "Why Twitter?" and that may be the root problem behind the company's ad campaign plans.
Lots of different functions
When asked point-blank what his answer to "Why Twitter?" is, the CFO gave quite a confounding answer. He basically said there are lots of different ways that people use Twitter, and it's different based on which geographic market you look at.
When prompted again, he gave a more concise explanation of Twitter's value proposition: "The value of Twitter is that we give people both the opportunity to find out what's happening right now, but also we give them a microphone to project globally what they find of interest and their points of view."
But Noto says that, in order to get people to actually use Twitter, the company needs to identify user segments and satisfy their particular needs. That indicates that Twitter's ad campaign should be a well-targeted direct-response campaign that highlights specific product features. And Dorsey already indicated that the upcoming Project Lightning feature will be a big part of the marketing plan.
But it sounds like the campaign will be branded
Noto indicated, however, that the upcoming advertising campaign will be more about branding than direct response. This strategy makes no sense given that Twitter sees different uses for different people in different markets. Moreover, the entire point of the marketing campaign is to close the gap between Twitter's 90% brand awareness and 30% market penetration.
A branded ad campaign aids in increasing brand and product awareness, which Twitter already has. A direct-response campaign calls on people to actually take action, something Twitter has lacked to a certain degree. The company reportedly has hundreds of millions of abandoned accounts. A simple call to action could be for them to reactivate their accounts, and try a new feature.
Given that Twitter has a huge list of emails, it could tap Facebook's targeting data to find lookalike audiences, re-engage users who have abandoned their accounts, and attract new users to specific features based on their interests. Of course, that would require Twitter to play nicely with Facebook, which it's likely not very eager to do. However, the ad campaign will include digital video and other digital display ads, so Twitter will be funding at least one competitor for display ads.
Twitter faces a challenge going forward to continue growing its audience without alienating its existing power users. During the company's most recent conference call, both Dorsey and Noto explained the importance of reaching the mass market, and that may involve some significant changes to Twitter's product.
But Twitter must tread carefully because those power users provide the vast majority of Twitter's value. Anything that disturbs their existing experience may destroy Twitter's answer to "Why Twitter?" -- whatever that turns out to be.
Noto believes "the marketing message would resonate with the heavy users just like it would with non-users." The question is whether the one-size-fits-all message will resonate at all.
Adam Levy has no position in any stocks mentioned. The Motley Fool owns and recommends Facebook and Twitter. 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.