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Will Twitter's fundamental altering of its USP win over advertisers, and Wall Street?

Twitter sparked huge debate over how it will position itself in 2016 with yesterday's unveiling of "conversational ads" and the rumoured introduction of 10,000 character tweets. The Drum's digital editor, Ronan Shields, examines the dynamics behind the social network's repositioning, and potential implications for the wider industry.

Twitter had a horrible 2015, it's fair to say, which consisted of a traumatic change in leadership – from Dick Costolo at the beginning of the year to its board eventually settling on co-founder Jack Dorsey as full-time CEO at its close.

This period also saw its stock price drop significantly – the value of which is now two-thirds of the value it was during its pomp – with investors' chief gripe centering on its faltering growth rate in user numbers (this is despite its user numbers having grown 11 per cent year-on-year during its last earnings call).

The fact that its revenues were also up 58 per cent year-on-year during the same period (although this did equate to a £132m loss in its eighth quarterly call since its 2013 IPO) demonstrates just how unforgiving a place Wall Street can be.

Twitter’s turnaround attempts

Since its latest financial results, Twitter has made various moves to assuage Wall Street concerns, not least its attempt to woo the gaming community with the hiring of Rodrigo Velloso directly from YouTube as its first director of gaming partnerships.

In addition, it has also attempted to offer advertisers insights into audiences that visit the site, without necessarily logging in, signalling its determination to remind brands of its reach beyond its logged-in monthly user base.

In addition it has also been keen to highlight its success in encouraging viewers to view paid-for native ad formats until completion, claiming that the volume of video consumption on the social network has jumped 150x across Twitter, Periscope and Vine over a six month period in 2015.

More recently, Twitter has attempted to kick-off its intended 2016 turnaround with the announcement of "conversational ad" formats that will encourage audiences to further promote a brand's message to their own follower base.

The experimental new ad formats, announced yesterday (5 January), will include "call-to-action" buttons that come complete with customisable hashtags aimed at encouraging enhanced levels of consumer engagement, according to the social network.

The new formats have been in beta for the last few months with brands including Lifetime and Samsung, with the beta experiment being rolled out to even more advertisers in all markets.

Andrew Bragdon, Twitter's revenue product manager, made the announcement in a post on the official Twitter ads blog, where he further detailed the functions of the new ad formats by explaining how the new call-to-action buttons work.

The new tweet appears to the consumer's followers in their timelines, and it includes the brand’s original photo or video, plus the original tweeter who then receives a "thank you" after the message has been promoted among their Twitter following.

Twitter as a publisher, not a sharing platform

However, more significantly Twitter has attempted to position itself as a publisher, away from its roots as a sharing platform – or micro-blogging site as it was initially billed – beginning with the continued rollout of Twitter Moments.

In addition, the rumoured replacement of its trademark 140-character limit with a new function that will allow users to post tweets containing up to 10,000 characters is similar to its earlier removal of the earlier 140 character limit of its direct messaging (DM) function.

Firstly, let’s examine the how such moves would alter the perception of Twitter, both in the minds of audiences, and just as crucially advertisers.

With Twitter Moments, it is beginning to ape earlier moves made by Facebook, with the content curation initiative, and consumer-facing offering, treading the same path as the earlier-launched Facebook Instant Articles.

In my opinion this is a tacit admission that while Twitter has masses of quality data – or tweets – contributed data from an influential user base, it must improve the offering to the masses, and this curation layer is necessary to further its appeal.

But how will advertisers and media owners react?

A sage move you may argue, but as raised above, what is to differentiate it from the more established Facebook – which has a much larger user base – in the eyes of advertisers? Plus, will mainstream publishers be keen to embed their content in yet another ‘walled garden’?

Earlier inquiries among figures in the digital advertising landscape from The Drum demonstrate that opinion is divided.

Some argue that doing away with its USP (ie the 140 character limit) may consign it to the milieu of digital content hubs – which would be a shame for a company that helped introduce the phrase ‘hashtag…’ into popular Western lexicon.

Plus with the additional introduction of the new ad/content formats, we must consider the pricing models, and revenue share deals it is proposing to advertisers with “conversational ads”, and Twitter Moments respectively.

One thing we can say for certain is that Twitter is likely to pose a very different offering to the market in 12 months' time under the prolonged stewardship of Dorsey, but the key question is: will Wall Street have the patience for it to pay dividends?

Ronan Shields

I cover digital media trading and martech for The Drum magazine, plus I write my own opinion pieces, I don't really commission them.

All by Ronan