For years, Twitter TWTR has been telling Wall Street that its monthly active user (MAU) numbers are not an accurate reflection of its total audience. Today the company announced that it will start showing ads to the roughly 500 million unregistered users who visit Twitter every month.
For example, someone who clicks on a link to a tweet via a Google GOOGL search may see an advertisement on that tweet page or on the user's profile. This is big news for investors who think that Twitter's MAU numbers simply aren't big enough in comparison to that of industry leader Facebook FB , which has a monthly user-base of over 1.5 billion.
The lingering question, of course, is just how much revenue these ads will generate. Twitter COO Adam Bain said in the company's latest earnings call in October that these tweets will monetize at half the rate of traditional Twitter ads.
The huge difference here is targeting. Twitter can accurately target its registered users because it knows who they follow, what they tweet, and what types of things they interact with. So, for example, Twitter can reasonably imply that an investor who follows ZacksResearch , tweets about stocks, and consistently favorites stock tips would be interested in seeing ads from investment resources.
Twitter knows much less about its unregistered audience. If you simply view a tweet without an account, all Twitter might know is that you clicked on a link via a Google search for "Stocks." This is a much less accurate targeting technique.
Despite hitting a user-growth wall, Twitter has been able to grow revenue pretty consistently. Now Twitter has another source of income without needing any new registered users. This news has sent TWTR soaring as shares are up over 7.5% on the day.
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