Over the past few months, Twitter (NYSE:TWTR) started reducing or eliminating ads for some of its "VIP" users, according to a recent Re/code report. It's unclear how many followers or tweets actually make a user a VIP, but it's clearly a move to make the platform more appealing for its most active and popular users.
An odd decision
Twitter hasn't released an official statement regarding the removal of those ads, but it's an odd move for a company that is struggling to gain appeal among mainstream users. Active user growth remains the company's top problem. Last quarter, its monthly active users (MAUs) only rose 11% annually to 320 million, its weakest growth since going public.
During Twitter's conference call last July, CFO Anthony Noto admitted that the company did "not expect to see sustained meaningful growth in MAUs" until it reached "the mass market." Removing ads for VIPs but showing them to "regular" users won't likely help it gain mass market appeal.
Since returning as CEO last October, Jack Dorsey has tried to make Twitter more accessible to mainstream users. He introduced Moments, which curate tweets, photos, and videos into a single tab. He replaced "Favorites" with "Likes," displayed ads to logged-out users, introduced "conversational" ads, and is mulling a removal of Twitter's 140-character limit.
Unfortunately, the recent departure of Twitter's media head, product head, engineering chief, and human resources VP all cast serious doubts on Dorsey's turnaround plans. To make matters worse, Twitter's former product chief, Kevin Weil, subsequently took on the same position at Facebook's (NASDAQ:FB) Instagram. Over the past three years, Facebook has also adopted many of Twitter's top features, like hashtags, followers, live streaming videos, curated stories, and live sports updates -- which have all likely throttled Twitter's appeal.
Desperate times, desperate measures
The removal of ads for VIP users indicates that Twitter is desperate to keep its top content generators active. These accounts pull users to logged-out pages where it can display ads and serve as fodder for "social news" stories. Unfortunately, this strategy also shows that Twitter values some users more than others, and it probably won't do much to boost its slumping MAU growth.
Leo Sun has no position in any stocks mentioned. The Motley Fool owns shares of 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.