Revenue isn’t Twitter’s main mission, according to the company’s head of global revenue, Adam Bain. “We hope to touch every person on the planet,” he said, and revenue “is a byproduct of that.”
What exactly he meant by “touch every person” went unsaid, but Bain, speaking to several thousand people at this city’s international Web Summit, did his best to make the case that Twitter is headed for big success, despite the cratering of its stock two weeks ago when it announced a decline in user growth.
Still, Twitter’s “byproduct” hit $361 million in the third quarter, he noted, and “we feel we’re just getting started.”
Bain took the crowd through through Twitter’s three sources of revenue: ads, data, and e-commerce.
Ad sales are the company’s main source of cash. One reason is “the ads look and feel just like the organic content,” – organic content meaning the stuff people tweet about. “That yields amazing advantages,” he said, as users retweet “on behalf of advertisers.”
Twitter also offers programs where advertisers pay less the more engaging their ads are. That encourages advertisements to be “good, not just loud.”
Data are the fastest growing revenue producer. Sales of Twitter data – on people’s interests and passions, on their their likes and dislikes – grew 171% last quarter to $41 million.
Twitter has “the largest set of public conversations out there” and companies are buying the data those conversations produce for various purposes, including deep-fryer manufacturers and hedge funds.
A maker of industrial deep-fryers, Bain explained, looks for Twitter mentions of soggy french fries to target restaurant chains as potential customers for their presumably superior deep fryers. “Thousands of people tweet every day about soggy fries,” Bain noted.
Hedge funds are using Twitter data to pick stocks. Without naming names, Bain said one hedge fund saw positive correlations between smiley faces on Twitter stock mentions and rising prices. Frowny faces and dropping prices were correlated as well. The financially savvy will want to know that the hedge fund is now using “more complex” algorithms.
The third revenue producer is e-commerce, although Bain said that business is in “incubation mode” and isn’t producing much cash yet. The company is trying out a “buy now” shopping button that appears when a tweeter mentions a particular product or service. Twitter is working on “what emotions you need to generate in order to get somebody to buy in the moment.” He called this “live commerce.”
“All we do in the monetization business is monetize emotions,” he explained.
Investors, who sent Twitter stock soaring after Twitter went public late last year, are worried there won’t be enough users to justify the even the company’s current stock price. In the year’s second quarter, new users totaled 16 million. In the latest quarter, only 13 million, for a total of 284 million.
Bain said that at least twice that many people look at Twitter but haven’t yet started tweeting. “We have this massive untapped audience out there,” he said.