More ads and timeline tweaks: 4 must-know facts from Twitter’s Q3 earnings

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Twitter is a public company now, which means it’s beholden to shareholders who may not use or even understand the service. Those shareholders get scared by numbers that don’t mean much to the average Twitter user, like monthly actives and ad revenue per timeline view.

The social network reported its third-quarter earnings on Monday, and at first glance, everything looks great. Twitter is definitely making money: The company pulled in $361 million, up 114 percent year-over-year. Ad revenue is up. Timeline views are up. More users gravitated to the network. But Wall Street isn’t happy. Twitter continues to add new users at a snail’s pace—just 13 million worldwide last quarter, and only 3 million of those newbies are in the U.S. Timeline views per monthly active user slid 7 percent to 636 views, and Twitter expects that number to continue declining.

Don’t worry, though. Twitter has a strategy, as CEO Dick Costolo vaguely outlined in the company’s Monday night earnings conference call with analysts. That strategy may appeal to finance folks, but four takeaways from the call indicate Twitter power users might not be so happy with the network’s direction.

dick costolo Joi Ito

Twitter CEO Dick Costolo has his work cut out for him.

Twitter just can’t seem to grow

Twitter had 218 million monthly active users when it went public last year. Now it has 284 million. Its growth rate is steadily trending up, but investors still hammer the network over signing up more people. After all, Facebook is just two years older than Twitter and has long since cleared a billion active users. It’s not like the network isn’t trying. Twitter rolled out a new user onboarding process in the third quarter that uses your interests and web browsing history to create a timeline for you from scratch.

“We get them into a fully populated timeline that doesn’t require them to immediately know the language of Twitter or who is on Twitter,” Costolo said during the earnings call.

There are three kinds of Twitter users

Part of Twitter’s problem is that far more people browse through one person’s tweets—or read embedded tweets and timelines on other sites—without signing up or logging in to the service than actually sign up. Costolo estimated that the number of logged-out users is one to two times the number of active users. Twitter only makes money when people click on the ads they see in their timeline, so if people are avoiding the timeline altogether, this spells trouble for Twitter.

“They are monetizable,” Twitter CFO Anthony Noto said of those logged-out users during the call.

It’s unclear exactly how Twitter plans to make money off people who don’t even have Twitter accounts, but the network has been making improvements to make browsing through tweets off-timeline more pleasant. The web profile redesign back in April was part of that effort, and Noto said the impact has been positive. Twitter saw an 83 percent increase in profile impressions, a 77 percent increase in scrolls through tweets on a profile page, and 15 percent increase in favorites on profiles after rolling out the new look.

“We’ll continue to experiment,” Noto said.

twitter redesign

Twitter's new web profiles were designed to appeal to users who don't have Twitter accounts.

More changes are coming, but don’t freak out

Twitter has to appeal to people who use its site without signing in, but it hasn’t forgotten about the diehards who built Twitter from scratch.

twitter ios

When you pull to refresh your timeline, you might see tweets from people you don't follow.

“Obviously Twitter will always be a real-time network,” Noto said. “There are time periods when something incredibly relevant to you as a user could’ve occurred hours ago before you opened the app, and we will see opportunities like that to give you content that’s relevant.”

That means surfacing tweets to the top of a timeline where you can see them, or offering you tweets from people you don’t follow if you pull to refresh and none of the people you follow have tweeted anything new. (After all, if you’re not reading new stuff in your timeline, you won’t see any ads to click. See?)

For new users, the fully populated, interest-based timeline is web-only for now, but Costolo said that effort will soon roll out to mobile. Costolo also has big plans for Fabric, the new SDK for iOS and Android developers that will help them build and monetize their apps—and puts Twitter front and center of those apps.

Ads for TweetDeck

Fabric’s toolkit includes MoPub, Twitter’s mobile app ad exchange that will help developers make money off their apps once they get the ball rolling. Costolo said there’s an opportunity in “being part of the foundation of the entire mobile app landscape,” and that opportunity includes extending the reach of Twitter’s ad platform.

“We will think about and look for opportunities to provide our native advertising units in syndication, both to other Twitter-based properties like TweetDeck and across the entire mobile application ecosystem,” Costolo said.

So don’t be surprised when ads pop up in your favorite Twitter client or apps made with Fabric. It’s all part of Twitter’s rapidly unfolding plan to take over your phone without a phone of its own.

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