Is This Twitter, Inc's Secret Weapon for Monetizing Its Users?
Twitter is a niche platform in the social media sphere these days compared to behemoths such as Facebook and LinkedIn. Facebook, for example, counted 1.28 billion people as monthly active users, or MAUs, in March, whereas Twitter clocked in with just 255 million MAUs during the same period. With more than five times more people now using Facebook, advertisers are putting more ad dollars to work on Facebook than Twitter.
Twitter's stock has lost more than 35% of its value so far this year, as a result. However, the possibility of a new in-feed feature called "Buy Now" could help Twitter better monetize its user base going forward. Last week, Recode said Twitter was reportedly testing a "Buy Now" option that would let Twitter users make purchases from a tweet. While Twitter has not yet officially announced any such feature, this could be just what Twitter needs to get ahead in mobile commerce.
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Twitter's purchase of the MoPub ad network last fall also bodes well for its monetization goals. With MoPub, Twitter now reaches more than one billion iOS and Android users each month. Additionally, it is encouraging to see the social media platform diversifying its advertising tools beyond promoted tweets. Advertisers can now create tailored audiences from email databases, target specific TV conversations for Spanish-language programming, and run mobile app install ads on Twitter.
Nevertheless, if Twitter were to successfully launch a "Buy Now" button that was seamless and easy to use, it could be a game changer for the company. In the fiscal first-quarter, Twitter's advertising revenue climbed 125% year over year. Mobile advertising accounted for as much as 80% of that. However, a commerce feature like the rumored "Buy Now" button would give Twitter a new revenue stream if it's a hit with users.
If Twitter does add commerce functionality to its Tweets, it will be interesting to see what percentage of sales Twitter would take or how it would structure costs for such a feature. For now, investors are hoping this venture gains better traction than Twitter's recent partnership with Amazon.com .
Twitter teamed up with the e-tailer earlier this year to create #AmazonCart. The feature allows Twitter users to add products to their Amazon shopping cart using the hashtag, #amazoncart, while on the social media platform. Unfortunately, it only creates an extra step in the check-out process when it is just as simple to buy directly from Amazon. Perhaps Twitter will have better luck with built-in functionality in the form of its "Buy Now" button.
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The article Is This Twitter, Inc's Secret Weapon for Monetizing Its Users? originally appeared on Fool.com.Tamara Rutter owns shares of Amazon.com, Apple, and Twitter. The Motley Fool recommends Amazon.com, Apple, Facebook, and Twitter. The Motley Fool owns shares of Amazon.com, Apple, and Facebook. 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.
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