Twitter Inc Has Heard Your Cries of "What Does That Trending Hashtag Mean?"

By Markets Fool.com


Twitter's more detailed trends section replaces Discover. Source: Twitter

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If you've ever looked at Twitter's list of trending topics and had no idea what any of them were -- and wished you did -- you're in luck. Twitter is changing its mobile user interface to provide more details on what's trending, so users can more easily join the conversation. The new trends information can be found in the search tab of Twitter's mobile app.

At the same time, Twitter is retiring the Discover tab (one of my favorite features) to focus more on trends and other features aimed at increasing engagement. The move to ditch Discover in favor of more accessible trends is part of Twitter's efforts to become more user-friendly for people that are new to the platform.

Catering to new users
Over the last six months or so, Twitter has focused extensively on attracting and engaging new users. It introduced things like "While You Were Away ..." and eased the onboarding process by reducing the number of steps needed to register and get started. It's also helped users find people to follow with interest-based timelines generated at sign-up as well as the @MagicRecs account.

In November, I wrote that Twitter sees more people register and stop using the service than it has monthly active users. That represents a huge failure on Twitter's part to keep its users engaged with its service.

At its analyst day last year Twitter's Consumer Products team outlined some things it's doing to solve that problem. It included features like "While You Were Away ..." and instant timelines, as well as "push notifications" and emails to "at-risk" users. Refocusing trends is yet another step toward engaging new users with the platform by providing additional information about what people are talking about outside of (often cryptic) hashtags.

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Getting new users to remain engaged can help Twitter shore up the decline in active user growth. The company added just 4 million active users last quarter. Twitter has piqued the interest of millions more -- as demonstrated by the 500 million people who visit the website but don't log in each month -- and gets tons of free advertising from various media outlets using its content.

Long term, CFO Anthony Noto believes the company can double its active users to about 560 million. Keeping new users engaged going forward will be key to getting there.

Increasing engagement across the board
The additional information also increases the likelihood regular longtime users will engage with trending topics. While Twitter doesn't provide much in the way of engagement metrics, the one it does -- timeline views per user -- saw a clear decline last year. Management says it's going to stop reporting that metric as it doesn't provide a clear picture of user engagement.

Without any company metrics to go on, it'll be hard to determine if engagement is improving from efforts like revamping trends and other initiatives at the company. One thing to pay attention to is total ad engagements. Increasing engagement will have a positive impact on total ad engagements, but ultimately ad engagements are the reason investors want to see increased engagement and more users.

There are several other factors that will increase ad engagement -- namely total users and ad load. Management will provide an exact number for user growth, but will likely be more vague when it comes to ad load. Look for more color on ad load when Twitter reports its first-quarter earnings at the end of the month.

Trending the right way
While Twitter only grew active users by 4 million last quarter, there was a lot to like about the company's first earnings report since announcing it was going to take more initiatives to better engage new users. Timeline views increased year over year for the first time in four quarters. Ad revenue per 1,000 timeline views increased 60% as well, leading to a 97% increase in ad revenue despite the slow user growth.

Getting more users to read about trending topics and contribute to the conversation will keep timeline views per user trending back up to previous levels. If Twitter can maintain its growth in ad revenue per 1,000 timeline views and even manage to keep its new users from churning away, it could outperform (already lofty) expectations of 70% revenue growth. The new trending section is just a small part of that.

The article Twitter Inc Has Heard Your Cries of "What Does That Trending Hashtag Mean?" originally appeared on Fool.com.

Adam Levy has no position in any stocks mentioned. The Motley Fool recommends Twitter. The Motley Fool owns shares of Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.