For a company that makes a living (or arguably doesn’t) from advertising, it may be surprising that Twitter doesn’t have an in-house marketing team. To some extent it hasn’t needed them since the service has created enough buzz to grow organically to nearly a quarter billion monthly active users (MAU), but now that growth is slowing Twitter Inc (NYSE:TWTR) has started approaching ad agencies looking for new ideas to spread the word, reports Maureen Morrison for Ad Age.
This won’t be the first time that Twitter Inc (NYSE:TWTR) approached ad agencies – it has produced a handful of videos in the past, but it’s apparently looking for a more than just a one-off project and wants to have a go-to agency that it can approach whenever it wants to launch a new campaign.
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Twitter isn’t catching up on Facebook… or WhatsApp
The need for some advertising should be clear to anyone who pays close attention to user numbers. While Twitter is one of the most popular online services, it still only has about a fifth as many MAUs as Facebook Inc (NASDAQ:FB), and its annual growth rate is falling too quickly for it to ever catch up. Even WhatsApp, recently acquired by Facebook Inc (NASDAQ:FB), has more MAUs than Twitter Inc (NYSE:TWTR) does.
To close that gap, Twitter Inc (NYSE:TWTR) needs to convince people that the service is valuable and deserves a spot in their internet lineup, including some people who have already signed up and abandoned the service since there are more than 650 million Twitter accounts, but the majority go unused.
Twitter lost $10 billion in market value over slow MAU growth
The declining MAU growth rate has been a sore point among investors, causing the stock to lose more than a quarter of its value in a single day last month, immediately wiping out $10 billion in market value. The stock has regained some ground since then, but it has been hovering around $55 compared to recent highs above $65. In the aftermath, there were short contracts out for nearly 20% of Twitter Inc (NYSE:TWTR)’s share float, compared to just 2% for Facebook Inc (NASDAQ:FB) and 4% for LinkedIn Corp (NYSE:LNKD). Clearly, the sharks smell blood in the water.
To pull itself out of this hole, Twitter Inc (NYSE:TWTR) needs to present a solid plan for reversing MAU growth trends or for monetizing accounts more effectively. Charging subscription fees would probably just cause a mass exodus, which means the answer once again lies with advertising. Twitter Inc (NYSE:TWTR) might be better off asking advertisers what it can do for them instead of the other way around.