Twitter (TWTR) might find it difficult to compete with Facebook (FB) as an advertising platform, but it is definitely discovering newer ways to increase its ad revenues. Reportedly, the company is now planning to sell ad space on Twitter feeds placed on other websites or apps. It is yet unclear how Twitter will execute this advertisement strategy, but various websites are expected to feature Twitter feeds with marketers’ ads soon.
With this advertisement strategy, the company plans to rope in non-Twitter users as well. The company will now be able to generate ad revenues from clicks on websites which have a live Twitter stream and thereby lower its dependence on Twitter users.
Though this marketing strategy will not boost Twitter’s user base, the benefit will come from the additional ads placed on numerous websites and apps. Reportedly, the advertisement strategy is expected to be implemented on a profit sharing basis with the website and app makers.
In the recent days, Twitter has been affected by the slowdown in its user growth rate. Attracting more advertising revenues might be difficult if the user growth rate does not improve, especially considering the significant competition from Facebook, Yahoo! Inc. (YHOO) and market leader, Google, Inc. (GOOGL).
Twitter expects to diversify its revenue stream and increase sales from $665 million in 2013 to $14 billion by 2024. However, it currently has 60,000 advertisers as against Facebook's 1.5 million, according to reports. As a result, it plans to increase the share of ads that appear on users’ timelines to 5% as well as show ads to 500 million non-Twitter users targeted through live streaming of Tweets.
Twitter has a Zacks Rank #3 (Hold).
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