Twitter Inc announced last week that it plans to enable advertisers to target the over 500 million passive users who access tweets without logging into the site. This functionality is being gradually rolled out among select marketers in the U.S., the U.K., Japan and Australia, with more regions likely to be added in the future.
Advertisers will be able to reach out to all those people who click on Google search links to tweets. And they currently vastly outnumber the around 320 million monthly active users that Twitter has. The initiative is a win win for both. Marketers get a much bigger canvas, and Twitter in return gets to eke out revenue from this largely neglected space. Of course, it’s too early to forecast how much that passive user base is worth.
Twitter Passive Users Could be a Key Revenue Stream
Twitter Inc has been delving on plans to monetize its passive user base since 2014, when it suggested it could charge half the rate for ads to passive users. During the analyst day in November 2014, the firm even went as far as to say that this opportunity could be worth almost $10 billion over the long run.
The actual impact of this new revenue stream to Twitter’s total sales will be visible only once marketers start using the feature. However, some analysts argue that the results might not be visible immediately. They reckon that Twitter, by testing only on desktop web clicks, has limited the scope of the initiative.
Twitter Needs to Target Mobile Passive Users
“Given the increasing usage of mobile devices to access social media and the general consumer shift towards mobile rather than desktop for most Internet browsing, the strategy to test this new monetization avenue on desktops might not yield high revenues initially. For this strategy to be successful, Twitter will have to bring this to its mobile platform at some stage,” analysts at Trefis Institutional Research wrote on Forbes.
The analysts there went on to add that while monetizing passive users will be a key part of Twitter’s future growth, any major change should not be expected before “the next earnings release.”
Shares of Twitter Inc closed Tuesday at $23.95. The stock is down 33% year to date. Trefis has a current target price of $34.49 a share. But analysts at Trefis are hopeful that the estimate could have a further 15% upside if the monetization of passive users turns out to be a success.