There’s one number that investors, analysts, and pundits are fixated on with Twitter — 255 million monthly active users.
For a mainstream, well-known product, this is a relatively small number. And it’s not growing fast enough to make investors happy, which is why the stock is hitting new lows this morning.
And this is why Twitter wants people to focus on a different, much bigger number — 1 billion. That’s the number of iOS and Android devices Twitter can reach with its mobile ad network, MoPub.
On last night’s earnings call, CEO Dick Costolo said of MoPub, “It now reaches over 1 billion iOS and Android users, making it one of, if not, the largest in-app mobile ad exchange and the only one at scale to offer publishers native in-app advertising.”
Later in the call, he said, “Marketers are looking for two things, right? They’re looking for scale and engagement. And when you think about the scale of already having thousands of in-app publishers deploying MoPub that deliver over 1 billion iOS and Android users, you’ve got scale there.”
Costolo wasn’t the only person pushing this message.
On CNBC, Chris Sacca, the largest institutional shareholder in Twitter though his investment fund Lowercase Capital, said the same thing. “When I hear [your] last panel talk about the addressable markets, it’s funny no one mentioned MoPub. And yet, with MoPub, one advertiser comes to Twitter and they can get their ad in front of a billion users on iOS and Android. And that’s AdSense, that’s a $US12.7 billion business over at Google.”
This, incidentally, is exactly what Peter Kafka at Re/Code predicted would happen. In December, he wrote, “Twitter executives won’t come out and put it this way, but MoPub offers the company a safety net: If Twitter’s growth stalls out, and the company never becomes a truly mainstream product, MoPub offers Twitter a revenue stream that isn’t dependent on Twitter users.”
User growth has slowed at Twitter, and now it’s trying to change the conversation. It’s saying that it has the potential to be a massive mobile ad network.
This could be true, but it’s tough for investors to wrap their mind around the idea that they have invested in the next Facebook, but in reality they’re getting something totally different.
The valuation metrics for an ad network are totally different than a social media platform. (Not to mention that Twitter is a $US22 billion company. It paid $US350 million for MoPub. It’s hard to justify a $US22 billion valuation on the back of a $US350 million company.)
Still, if you’re looking for the bull’s case on Twitter, this is pretty much it. Because, right now, it’s hard to argue Twitter will become a mainstream product with Facebook-like levels of usage.
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