‘Playing to their strengths’: Twitter’s revved-up product focus piques publisher, advertiser interest
After years of criticism for being slow-footed and indecisive, Twitter has finally started to spread its wings, shipping a torrent of product changes this year.
About one year after it rebuilt its ads server and architecture to more easily support additional products, it has launched new preroll and sponsorship opportunities for its video ad product, Amplify, as well as overhauled its app installation and website clicks programs.
And on the consumer side, its acquisitions of Revue and Scroll, as well as its launches of Super Follows, Tip Jar and Spaces, have publishers and creators looking at Twitter with fresh eyes, not just as new opportunities to engage users but to potentially nurture and build new relationships with subscribers. It also has analysts wondering about the potential upside of a subscription-focused product.
All of those changes put Twitter one step closer to realizing a potential that has always been distinct from Facebook. But the company also needs that flurry of changes not to affect daily user growth, a stat that still serves as a bellwether for most platforms: Despite beating revenue estimates for the first quarter of 2021, Twitter’s stock price slid 8.5% in April after revealing that it missed its target for growth in monetizable daily active users.
Twitter’s head of consumer product, Kayvon Beykpour, revealed at Twitter’s 2021 Analyst Day that it intends to grow its monetizable daily active user base to 315 million by the end of 2023, up from 199 million today.
Twitter declined to make an executive available for this article.
“In the past two years or so they’ve been playing catch-up,” said Rohit Kulkarni, managing director at the investment firm MKM Partners. “Now they are acting and talking like their peers.”
For years, Twitter took its lumps — including plenty on Twitter, natch — for being more hesitant, more cautious and more limited than other platforms, particularly in comparison to Facebook. While Twitter piqued lots of interest with Vine and Periscope, observers and employees alike felt like things moved slowly.
“It’s always had a much slower cadence than its peers,” one former employee said. “It has not really evolved the way it should.”
Recently, that has begun to turn around. In the summer of 2020, about a year and a half after Twitter committed to overhauling its infrastructure to allow more rapid development, it completed that work. That change helped Twitter significantly increase its development capacity and the company entered 2021 hoping to push those capabilities much further. Twitter wants to double its development velocity this year, CFO Ned Segal said in March. In its full-year earnings presentation, Twitter revealed it planned to grow the company’s headcount by 20% in 2021, with most of the hires concentrated in engineering, product and research.
Those additions have come with costs — last year, Twitter’s research and development expenses rose 28%, to $873 million; its general and administrative expenses, which typically includes headcount, rose 56%, to $562 million — but the investments have shown signs of paying off. Its first-quarter revenues exceeded $1 billion, up 29% year over year.
Clean up and catch up
A lot of the moves Twitter has made recently have been about bringing it closer to parity with other major platforms. Last November’s launch of fleets and carousel ads, for example, basically caught Twitter up to products that Facebook, Pinterest, Snapchat and LinkedIn offered users and advertisers already, in some cases for years.
“Some of it is what I’d call catching up,” said Amanda Grant, global head of social at the media agency GroupM.
Getting to the same place as its competitors will give Twitter a chance to begin resetting the reputation it has acquired over the years.
“I think they have that burden to gain the confidence of the advertiser segment [that lost faith in what they offer],” Grant added. “Because there’s over a decade worth of user familiarity with the platforms, you have what advertisers believe is the truth about the platform.”
The changes Twitter has made on its consumer side have shaken up its relationship with publishers too. Though Twitter is at or near the top of many reporters’ and editors’ minds, it accounts for a single-digit percentage of referral traffic to publishers, according to Parse.ly data, and so tending to it became one of several things an audience development person might do with their workday.
“For a while, we fell back on our scheduling tool, to check the box,” said Alexandra Ptachick, the director of audience development for USA Today.
But Ptachick said Twitter’s recent announcements have drawn significant interest from many different parts of USA Today. The publisher, a beta tester of Spaces, is using them to experiment with new ways to put its reporters in front of users — last week, it hosted a Spaces event with the reporters who covered the Derek Chauvin trial in Minneapolis, Minn.
Ptachick and her colleagues are also intensely interested in figuring out how these newer products fit into USA Today’s ambitious digital subscriber targets.
“We look forward to understanding what Tip Jar might offer a publisher,” Ptachick said. “Any time you say there’s audience and there’s potential for growth and experimentation, and we can make money, [I’m interested].”
Perhaps the most compelling question surrounding Twitter’s product announcements, however, concerns subscriber revenue. Most platforms right now are racing — and spending — to show that they can deliver a hospitable environment for creators, and Twitter has gone no different, giving users the chance to sell exclusive access to content (via Super Follows), accept direct donations (via Tip Jar) and competitively build complementary businesses with their audiences (via Revue).
“They’re playing to their strengths,” said Matt Navarra, a consultant who specializes in social platforms and strategy. “They’re building products and features around the typical usage patterns they see on their platform, finding those tools to help [creators] make a living without having to rely [on] multiple services; you don’t need to have a Twitter account and a Patreon account now.”
But Twitter has gone one step further, hinting at plans to offer a premium version of its own product, which might feature everything from the ability to edit tweets to, via Scroll, read articles without ads.
How big the market for such a service might be is unclear. But they have a good test bed to experiment in the media, tech and finance universes that are already addicted to Twitter.
“The financial and media community derives highly asymmetric value from Twitter,” MKM Partners’ Kulkarni said. “The smart thing is to complement usage and monetization in a way that there’s a balance.”
“I don’t think that value will account for a majority of revenue,” Kulkarni added, “but it should get to 10% in the next couple of years.”
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