Just weeks after releasing Moments, Twitter (NYSE:TWTR) is ready to open the new feature to advertisers. Moments curates content around specific topics and events, presenting photos, videos, and text to provide Twitter users a full story of what's happening in the world. Now, Twitter is enabling brands to create their own moments for things such as a movie release, product launch, or some other promotion.
The ad product is very similar to how Snapchat first started monetizing its product with Sponsored Stories. Snapchat eventually started including ads in-stream with other OurStories and now advertises next to content in its Discover section, which features content from third-party publishers. I expect Twitter to follow Snapchat's roadmap for monetizing Moments, enabling it to contribute a big chunk of revenue to Twitter's top line.
Moments is the perfect medium for mobile ads
Moments is designed for mobile first. While Twitter has a desktop version of the feature, it's not much more than a curated timeline. On mobile, the experience is smooth, with tweets, videos, and pictures taking up the full screen. The only downside is that many photos and videos are horizontal as they're meant for traditional Twitter timeline consumption. Twitter crops those media but enables users to zoom out for more detail.
Moments represents an opportunity for marketers to craft vertically formatted advertisements. Snapchat tells its advertisers that vertical ads perform up to nine times better on mobile than letterboxed mobile ads.
Moments also offers yet another targeting capability for Twitter, should it expand to showing ads in-stream. People interested in Comic Con, for example, are probably interested in the next Marvel movie. With a dozen or so new Moments every day, Twitter will have lots of opportunities to advertise.
So how much is Moments worth?
Twitter isn't saying how much its charging for its first Promoted Moments, but some leaked information from Snapchat may give us an idea of how much Twitter stands to make from the feature.
Snapchat generated $3.1 million in revenue during 2014 in just over two months of Sponsored Stories. That's around $15 million on an annualized basis. Re/Code reported earlier this year that the company is targeting $50 million in revenue for 2015, and the Financial Times [subscription required] reports it's actually on pace to top $100 million. Next year, Snapchat reportedly expects to generate $200 million as election season heats up.
Snapchat most recently told the public that it has 100 million daily active users. For comparison, Twitter has around 139 million based on the 44% DAU-to-MAU ratio CFO Anthony Noto gave analysts during Twitter's second-quarter earnings call.
Don't forget, however, that Moments is also open to logged-out visitors on desktop. Twitter told analysts last year that 125 million unique visitors come to Twitter's homepage every month, which could add another 5 million to 10 million to Twitter's DAU number for Moments.
With those numbers in mind, it seems quite feasible that Twitter can replicate the financial results of Snapchat. And $100 million to $200 million is nothing to sneeze at. Twitter is expected to generate about $2 billion in advertising revenue this year, and around $3 billion in ad revenue next year. Moments could contribute more than 10% of that revenue growth.
Moments appears to be off to a strong start, considering Twitter is already testing monetization capabilities. Watch for the company to continue expanding its advertising options and features around Moments for it to quickly contribute a significant chunk of revenue to Twitter.
Adam Levy has no position in any stocks mentioned. The Motley Fool owns shares of and recommends 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.