Can Twitter’s New Marketing Strategy Drive User Growth?

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TWTR: Twitter logo
TWTR
Twitter

Recently, Twitter (NYSE:TWTR) rolled out a new marketing strategy  which includes videos explaining what Twitter stands for, distinguishing it from other social media platforms. This effort stems from the company’s research which revealed that, while 90% of people globally recognized the Twitter brand but did not use the site because they misunderstood what Twitter is. The company is now looking to change the perception of Twitter from being a social network enabling users to connect with family and friends to being the “go to” place for all news updates. Twitter is positioning itself as a unique platform where news ranging from big events to local updates along with live commentary can be accessed. We believe that, as  a decade-old company that is struggling to grow its user base,  a marketing strategy that highlights its uniqueness can attract more users to its platform.

See our complete analysis for Twitter

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Not A Social Network – A News Platform

A new video released as part of Twitter’s new marketing campaign explains that its platform can be used to answer questions such as “What is happening in the world?” (news relating to major global events) or “What is everyone talking about ?“ (news of local importance). This clearly indicates that the company is trying to position itself as a news platform and not a social network. This campaign comes after Twitter categorized itself as a news app in the Apple app store in April this year. Social media networks such as Facebook and Snapchat are seeing strong user growth and Twitter has not been able to keep pace with these companies. A new marketing strategy to position itself as a news platform that does not directly compete with social media giants can help Twitter significantly. Users who are not on Twitter since they consider it to be yet another social media website can be attracted to its platform through this differentiation. The company is investing heavily in acquiring rights to live stream popular sports and other events and creating a social experience around these events.  As it positions itself as a news platform, live videos of key events should enhance its offerings.

Strong user growth is critical for Twitter’s valuation. As per our estimates Twitter’s U.S. average monthly active users will increase moderately from around 66 million in 2016 to nearly 78 million by the end of our forecast period.

In the international markets, we expect this number to increase from around 250 million in 2016 to around 315 million by the end of our forecast period.

A faster pace of increase in users can lead to an upside to our price estimate. For instance, if the average monthly active users in the U.S. increase to 100 million by the end of our forecast period there can be a nearly 15% upside to our price estimate. Similarly if this number in the international markets increases to 400 million there can be another 10% upside to our price estimate.

Twitter is looking at various ways to attract and engage users on its platform. A marketing strategy that positions the company as a news platform can create a unique niche that should attract users on its network.

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