House of Twitter Cards

How Twitter’s Monetization Strategy is Coming Together

Last week, Twitter announced a new way for app developers to drive app installs and engagement through Twitter cards, promoted tweets and the MoPub ad exchange. The pundits responded quickly, calling it a huge win for Twitter even if it’s derivative of the Facebook mobile strategy. As Peter Kafka notes, this has been in the works for some time. While Twitter appears to have a user growth problem, it continues to monetize well, beating the Street numbers quarter after quarter. Almost all of that revenue comes from promoted tweets, accounts and trends with non-substantial revenue from Twitter cards, according to SEC filings. If that’s the case, then why did Twitter introduce Twitter cards in the summer of 2012? I believe Twitter is like the ambitious protagonists of House of Cards, Frank and Claire Underwood. Like the Underwoods, Twitter has been deliberately working behind the scenes for years. What’s in the cards for Twitter? Let’s start with Frank and the relationship between money and power.

Money is the Mc-mansion in Sarasota that starts falling apart after 10 years. Power is the old stone building that stands for centuries. I cannot respect someone who doesn’t see the difference.”

Twitter loses money—a lot of it. In 2013, on $665 million in revenue, Twitter lost $645 million. To make a dollar, Twitter has to spend two dollars. Twitter, like many other high-flying tech startups, spends money to make money. Diving into the SEC filings, it’s still unclear where specifically Twitter’s R&D spend ($594 million or 89% of revenue) and Sales & Marketing spend ($316 million or 48% of revenue) are going. We do have an idea of where it may go based on its initiatives.

One major focus for Twitter is user experience. In the last quarter, Twitter announced slower user growth and engagement. User growth in Q4 2013 was 30 percent up year over year but down from 39 percent in the third quarter. User engagement was also down—148 billion Timeline views compared to the third quarter at 159 billion. CEO Dick Costolo attributes the slower growth to Twitter’s challenging user experience. Indeed, my Mom doesn’t have a Twitter account; she does have a Facebook and LinkedIn account. This is why Twitter is moving aggressively into more image-friendly UIs, like the new Twitter profile and feed design (currently rolling out to some users like the FLOTUS. Get yours here.).

First Lady Michelle Obama @flotus new Twitter profile page. Source:

Even with a new profile page, it’s doubtful my mom will use Twitter. Nevertheless, she’s heard of Twitter and seen tweets before. How is this possible? Twitter, unlike Facebook and LinkedIn, has content that lives offline. As investor Bill Gurley says, you don’t have to tweet to Twitter. We’ve all seen tweets mentioned in sports broadcasts, the evening news or even during sitcoms. Tweets are unique from Facebook Likes because they are public, real-time and convey the shared experience of millions of Twitter users. Consider Ellen’s famous selfie during the Oscars:

Ellen’s tweet was the most retweeted of all time, beating President Obama’s re-election tweet in 2012, with 3.4 million retweets and 2 million favorites. More importantly, how many people saw the Tweet during the telecast or after the event? More than 43 million people watched the Oscars in the US with tens of millions more internationally. The tweet was then covered in multiple media outlets, increasing its reach. I can’t begin to calculate the full impact of Ellen’s tweet, but it’s a magnitude greater than the 28.6 million followers Ellen has today.

What does that mean for Twitter’s user growth and engagement problem? Twitter already has immense influence in media because of its ubiquitous nature. Working with Nielsen, Twitter is beginning to measure the reach of this “offline Tweet” engagement. One initiative is Twitter’s Amplify program for television and cinema. For example, here is Twitter’s second screen ad-retargeting product.

Twitter Amplify Ad Targeting Program. Source:

This product is great for Twitter users who are already engaging Twitter on a second screen while watching the show. But what about users like my Mom who are not on Twitter? Can Twitter/Vine embeds include an ad wrapper or pre-roll and be inserted into NYT articles? Can sponsored tweets be shown in a television programs like normal tweets? Twitter has unbound potential in monetizing the power and influence it has in traditional media. It’s Twitter’s power—not its money—that buys this type of free publicity:


But let’s be honest—Twitter still has to make money too.

“I like irons, but I love fire.”

Claire has a point. All this power with no money to show makes investors and advertisers uneasy. Fortunately, Twitter has incredible upside potential out of its existing users, particularly in mobile. The closest comp to Twitter is Facebook and conveniently, Facebook provides a crystal ball for how Twitter should make money.

Since 2012, Facebook has made a concerted effort to dominate and monetize its mobile presence. As I mentioned in a previous blog post on my corporate blog on ShareBloc (a Reddit for sales & marketing professionals where I’m the CEO & cofounder), Facebook has been making strong inroads in their mobile platform.

Source: SEC filings

Both mobile-only revenue as a percentage of total revenue is increasing and the mobile ARPU is growing at a staggering clip. A mobile user is currently worth $1.31 in Q4 2013. Five quarters ago, that ARPU was only $0.25. If you were to count mobile+desktop users as Mary Meeker does in her analysis, that ARPU is at $2.11 in Q4 2013, up from $1.25 in Q3 2012. How did Facebook add so much mobile-only revenue so quickly? The answer is in app downloads.

Since its introduction as a product feature in August 2012, the app download advertising product has driven 245 million app installs in 2013. At an estimated $2-3 (with upside to $3-4 for some gaming apps) in revenue per ad, the app install unit drove at least $500 million (and possibly up to $1 billion or more) in evergreen revenue to Facebook’s mobile platform in its first five quarters. There is no wonder ARPU for mobile users has been increasing at such a frantic clip. The average cost per install is $1.79 to acquire a quality user and up to $2.73 for mobile gamers. During the holidays, research firm SuperData estimated the CPI was more than $7.

Assumes $2.5 CPI. Q4 estimates based on three growth rates: flat q/q, +2.5% q/q or +5% q/q. Source:

Why does all this matter for Twitter? It’s because Twitter makes almost all its money on mobile. Looking at the two companies, while Facebook ($7.8 billion) towers over Twitter ($664 million) in total revenue, more than 75% of Twitter’s ad revenue last quarter comes from their mobile platform compared to Facebook at 53% of ad revenue. Twitter’s mobile ARPU is at $0.90 in Q4 2013 (up from $0.61 in Q3 2013), meaning there is tremendous upside once you factor in app downloads from Twitter Cards. While Twitter may not have the Facebook social graph or its platform, Twitter does have data centers filled with who you follow and your Twitter activity—AKA your valuable interest graph.


If you follow Arcade Fire on Twitter, for example, Twitter can push a Twitter App Download for the Ticketmaster or StubHub app when the band is in town. It is entirely possible Twitter is sitting on 3x its current revenue today, and that’s not counting the 1 billion users served by the MoPub exchange. That’s a lot of fire.

“That’s how you devour a whale, Doug. One bite at a time.”

Frank knows whales aren’t devoured in one bite and neither are the markets Twitter plays in. Twitter’s holding a lot of cards and in the next 24 months, I believe we will begin to see Twitter’s plans unfold. If Twitter Cards are the main delivery mechanism for next-generation products, where else can Twitter take its monetization? Let’s explore four unsubstantiated Twitter monetization tactics that can be game-changing in brief.

Twitter Reader

Twitter’s biggest problem is that it has a lot of readers but not a lot of writers. A recent study by Twopcharts states that 44% of Twitter’s 974 million accounts have never sent a tweet. Twitter claims 241 million active accounts in Q4 2013 so Twopcharts’ numbers aren’t too far off. Some pundits see this as a problem for Twitter since an engaged Twitter user demonstrates stickiness. But as Mark Rogowsky writes, Twitter’s problem isn’t the lack of tweeters. As you may recall, Twitter started out as a micro-blogging platform. Twitter, like blogs and other online communities, have a 90-9-1 rule: 90% of users read, 9% contribute occasionally (maybe via favorites or retweets) and 1% create most of the content. If that’s the case, why doesn’t Twitter create an app just for reading? The app would be a lightweight version of Twitter but designed for reading trending or featured tweets, like Flipboard. Or Twitter can redesign its UI to be more reading-friendly, which may be the direction it’s currently going in.


Twitter Payments

Twitter has dabbled in payments before. First, there was the AMEX Sync Twitter campaign, covered in great detail here. After that, Twitter shut down Ribbon’s in-stream payments through Twitter Cards. Then there was the potential development with Stripe. Finally, there’s the leaked Twitter commerce image from Fancy uncovered by Re/Code.


Twitter is sitting on potentially billions of dollars in micro-transactions from crowd-funding, tweet-to-donate or e-commerce. Think how powerful a tweet-to-donate Twitter Card from Presidential candidate Hillary Rodham Clinton would be in 2015? The challenges for payments is with credit card fees and ACH limitations, but we will cover that in the next blog post. If Twitter can figure out payments, it’ll have Paypal and Square Cash in its crosshairs.

Twitter for B2B

Twitter may be best known as the social network for @aplusk, @justinbieber and @katyperry but it turns out, Twitter is also one of the most popular distribution platform for B2B content. Don’t believe me? Go to any non-tech blog and see where the shares are coming from. Compared to other social networks, it rivals only LinkedIn in distribution and trails slightly in satisfaction according to a recent study by the Content Marketing Institute and MarketingProfs.


Twitter has already begun experimenting with Twitter Cards for lead-gen monetization. For those unfamiliar, lead-gen is the bread-and-butter for marketers and salespeople. You may have opted yourself in as an enterprise lead when you’ve filled out a form like this one from KISSmetrics. According to MarketingSherpa, 64% of enterprise leads are valued greater than $20. If Twitter Cards can effectively monetize leads with marketing assets like ebook downloads or signing up for a trial, Twitter can beat LinkedIn/Pulse at its own game.

Twitter Video & Images

Losing out to Facebook in acquiring Instagram also meant Twitter lost out on the most popular image sharing app on Twitter. In response, Twitter did the next best thing and acquired the company that would become Vine. Since then, Vine has done tremendously well as a standalone product and as part of the Twitter Card offering. Still, there’s an opportunity for Twitter to claim a stake in the image sharing space and that’s by acquiring or cloning Imgur.

Imgur, the favorite image sharing platform for Reddit users, has a ubiquitous use case: it makes uploading an image easy and sharing or embedding that image elsewhere even easier. Since all Imgur images are public, there is no issue regarding privacy. Conveniently, Twitter works best when out in the public as well. Just as the Reddit community launched Imgur, could the Twitter community do the same for Vine images? The Twitter UX could change slightly to mimic one or all of Imgur’s “upload image” options. Having a standalone image-sharing platform gives Twitter cross-platform opportunities. Your Vine images could be shared on other social networks, or embedded into websites, and include a javascript watermark that says how many times this image has been tweeted. By owning the images as well, Twitter could provide a powerful view in real-time image sharing across time, geographies and cohorts.

“For those of us climbing to the top of the food chain, there can be no mercy. There is but one rule: hunt or be hunted.”

The title of this post House of Twitter Cards is intended to be a play-on-words rather than a criticism of the media empire Twitter built. In fact, Twitter is in a unique and strong position because it has incredible public mindshare, a lot of upside in user acquisition and multiple pathways to increasing monetization. But it has to move quickly. As the previous quarter has shown, Twitter’s meteoric organic growth is slowing down and Twitter needs to play a few of its cards to stay in the game. We’re far removed from Twitter being a clown car that fell into a gold mine as Zuckerberg once put it, but we’re also still too close to the cautionary tale of AOL Keywords.


Remember AOL Keywords? Probably not if you’re a millennial. But if you’re in your thirties or older like me, an AOL Keyword was the unique word that would bring an AOL user straight to the Keyword’s AOL landing page (think Twitter or Facebook profile). It also bridged traditional media like television to the Internet. Advertisers or TV shows would actually show their URL and AOL Keyword next to each other, like and AOL Keyword: NBC. If this sounds familiar it’s because the new AOL Keyword is Twitter’s @ and #. In my opinion, AOL Keywords became irrelevant when search (specifically Google) made the World Wide Web easier to traverse. What will make Twitter obsolete? As of now, there is nobody doing a better job of capturing the ephemeral real-time Zeitgeist of the human condition than Twitter. But don’t sleep on your success, Twitter. As Frank Underwood best puts it: “I’ve always loathed the necessity of sleep. Like death, it puts even the most powerful men on their backs.

  • Special thanks to Rich Yueh and Brett Northart for your feedback.
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