SAN DIEGO (TheStreet) -- Twitter's (TWTR) - Get Twitter, Inc. Report has launched a way to make money that could quiet even its loudest critics who have complained that the company's number of monthly active users isn't growing fast enough.
Tuesday, Twitter kicked off an ad syndication initiative that allows its advertisers to simultaneously run their Twitter ads, called "Promoted Tweets," off the social network and inside partners' services and applications. Twitter's partners at launch are the mobile newsreader Flipboard and Yahoo! (YHOO) Japan.
"Through this new partnership, Nissan could run a
campaign on Twitter, with specific creative and targeting, and simultaneously run the campaign off Twitter, with the same targeting and creative in the Flipboard app," Ameet Ranadive, senior director of product at Twitter, wrote in a blog post.
The syndicated advertising initiative is, perhaps, the most compelling proof yet of the tangible value of people who are merely exposed to Twitter's content. Twitter has been aggressively attempting to make the case of its universal appeal for the past few quarters, highlighting at its investor day in November that more 500 million people visit its properties every month and don't log in.
The company has also said that tweets syndicated to third-party services amount to 185 billion additional impressions.
"So what,?" Wall Street has responded, as Twitter has so far only been able to monetize its members who do log in regularly, known as monthly active users.
"Show me the money," investors have cried.
Now, Twitter is doing just that and at a crucial time.
With the company set to deliver fourth-quarter results on Thursday, Twitter must convince Wall Street to stop fixating on the most disconcerting metric that has led to the depreciation of its stock: the stagnant size of its audience.
During the third quarter last year, Twitter added just 13 million net new users for a total of 284 million MAUs. The number upset Wall Street, sent the stock into a tailspin, and, in some circles, kicked off a campaign to oust Chief Executive Dick Costolo.
Shares were higher by 3.5% on Tuesday on news of Twitter's plans for syndicated advertising, but the stock is still down more than 20% since the third-quarter report.
A new advertising stream that can produce revenue with or without Twitter needing to build its active audience, however, is about to change that, according to SunTrust Robinson Humphrey analyst Robert Peck.
"We believe this could be the beginning of what we deemed Twitter's 'Facebook Moment'," he wrote in a Tuesday note.
As Peck sees it, Twitter can halt its market slump and dramatically change its perception on Wall Street for good, just as Facebook did, "in the spring of 2013, where some investors believed that Facebook would never be able to monetize mobile and the stock sat around $20."
It is too soon to tell if this is that moment for Twitter, but, at the very least, the social network has given investors something enticing to mull over ahead of its fourth-quarter earnings report, where expectations are quite low around Twitter's ability to jump start growth in MAUs.
The conservative consensus among analysts is that Twitter will report a monthly active audience of 290 million people, which would represent a net addition of just 6 million users over the prior quarter and still come in lower than rival Instagram. The Facebook (FB) - Get Facebook, Inc. Class A Report -owned photo social network leap-frogged Twitter in December and now has 300 million active members.
For Twitter's fourth quarter, analysts polled by Thomson Reuters are anticipating adjusted earnings of 6 cents a share on revenue of $453.14 million.
--Written by Jennifer Van Grove in San Diego, Calif.
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