Twitter (TWTR) investors have seen their investments cut in half since the Twitter stock price reached a 52-week high back in April.
The last two quarters have seen active user growth stall and efforts such as “While you were away” (which curates tweets for users) fail to increase engagement.
Without growth in either metric, the prospects for TWTR’s future growth and potential profitability are bleak.
With a long-term focus on user growth including the new Moments section, integration with Google search and a marketing campaign, Twitter is now testing new ways to engage users.
Twitter stock investors are hoping that these incremental tweaks will improve engagement, enabling TWTR to show more ads to its users.
Twitter Introduces Emojis
Earlier this month, Twitter made a small change that rippled throughout the Twittersphere: Users used to “favorite” tweets with a star icon, but now they “like” tweets with a heart, much in the vein of Vine. Lots of people were upset, but Twitter found in its early tests that the change resulted in increased engagement and increased accessibility for new users, which is key to growing TWTR’s active user count.
Now Twitter is testing multiple reactions using Twitter emojis, which could provide the company with some valuable feedback. One user found that TWTR is testing 12 different reactions using emojis. This is similar to a test Facebook (FB) is doing, testing multiple reactions besides “liking” posts.
So how does this translate to good news for TWTR stock holders?
Twitter could see an even bigger uptick in engagement from users if they have multiple ways of reacting to a tweet. Users liked “favorites” because it connoted things that didn’t necessarily mean “favorite.” New Twitter emojis could give users an easier way to categorize their saved tweets, and give Twitter a better understanding of its content. Different reactions give Twitter hints as to what a certain tweet means.
A better understanding of its content could help Twitter improve its curated content feeds. The new Moments is aimed at making it easier for new users to engage existing users. Moments is something Twitter stock owners have high hopes for. Meanwhile, “While you were away” has failed to increase user engagement.
Engagement Equals Ad Revenue
Twitter currently suffers from an ad targeting problem, as the majority of its users find ads irrelevant. But emojis don’t just tell Twitter about the content its users post, it tells Twitter about the users themselves.
A 2013 study found that your Facebook likes can produce a better personality profile on users than close friends and relatives. As a result, Facebook is really good at targeting advertisements. If Facebook can get a good idea of who you are based on one emotional reaction to things, think how valuable a slew of different reactionary data could be for Twitter stock investors.
Improving its ad targeting would increase TWTR’s average revenue per user, which would help Twitter improve its profit outlook despite lackluster user growth. Meanwhile, Twitter continues to experiment with new ways to get users engaged and expand its audience.
New Twitter emojis aren’t a magic pill, and there’s still potential that users will be paralyzed by choice if faced with too many options. It’s worth finding out, however, if multiple reactions have a positive impact on the amount users engage with content, because they can be much more valuable than a simple “like.”
As of this writing, Adam Levy did not hold a position in any of the aforementioned securities.
