Twitter Looks for New Revenue Sources

Ups and Downs

The last quarter has been a roller coaster ride for Twitter (TWTR). Its member base expanded significantly, and those new users seem to be sticking with the platform. Twitter was also hit by a Bitcoin scam targeting dozens of its verified users earlier this month. The company expects its expenses to go up by about 10% as it deals with fallout from the hacking.

Investors also have their eyes on Twitter’s falling ad revenue and its plans to solve this problem. Last quarter, ad sales for the company shrunk by 23%. Now, Twitter is exploring several creative ways to diversify away from display advertising.

Exploring Alternative Advertising Models

Twitter is working on adapting its advertising offerings by expanding its direct-response ads and its self-serve ads. Direct-response ads are ads which prompt a viewer to do something specific, like sign up for an email list or make a purchase. Google (GOOGL) and Facebook (FB) already have large direct-response ad platforms, which are particularly popular among small-and medium-size businesses.

Twitter is also working on developing its self-serve, or programmatic advertising. This type of advertising is a streamlined model which allows business owners to set up ad campaigns without salespeople or contracts.

Twitter already has some self-serve and direct-response advertising, but its operations are small compared to Facebook’s and Google’s. Twitter has also discussed the possibility of creating its own ecommerce operations, which could be complimented by these two forms of advertising.

Testing a Subscription Service

Twitter is also considering the idea of offering a paid version of the platform without ads. Like Google and Facebook, Twitter has long followed the model of offering free services to a large user base and making money on advertising. Now, Twitter may experiment with changing that model.

The company’s CEO, Jack Dorsey said on a recent investor call that he has “a really high bar for when we would ask consumers to pay for aspects of Twitter.” He did confirm that Twitter is beginning to explore what a subscription model could look like, as well as other potential changes to the company’s business model.

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