The Key To Unlocking Value For Social Media Companies [Facebook Inc, Twitter Inc, GrubHub Inc, Weibo Corp (ADR)]

In a troubling Q1 2014 earnings report, Twitter revealed that monthly active users (MAUs) were lackluster, with only a 6% gain since last quarter. And the previous quarter saw only a 3% growth in MAUs. The report also showed that TWTR’s net loss grew by more than $100 million. Twitter stock fell more than 8% that day, and it’s down nearly 17% since its Nov. 8 initial public offering (IPO).

In an effort to improve its numbers, Twitter is in the process of rolling out 15 types of new ads aimed at e-commerce companies and mobile game developers, according to The Wall Street Journal.

But the key here is the addition of a mobile-app install unit. That means an ad for a game, for example, includes a button that takes users directly to an app store where they can buy it.
Facebook has included this tool since late 2012 – and in its most recent quarter, mobile in-app install units represented half of the company’s revenue.

Another way Twitter has been trying to boost ad revenue is through e-commerce. In early May, it built in a way to send impulse-buy ads to people based on what they are tweeting about. In doing so, TWTR partnered with Amazon.com Inc. (Nasdaq: AMZN) to let users type #AmazonCart to respond to tweets that include an Amazon link – and put the item directly in their cart.

If Twitter is able to increase its user base and find successful ways to monetize it via ads, the stock could pull a Facebook-like turnaround.

Money MorningWritten By Tara Clarke From Money Morning

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