Twitter Went Profitable Because of Higher Engagement

I heart @Twitter. Always have (follow me @tuckross). Been around since the beginning and think it has been one of the most creative platforms for social media: real-time time, events, tragedies, social change - no other platform is as dynamic and fluid as Twitter.

I've been sad to see it lose traction as they went stale on innovation - like they were out of good ideas and just let it run. Which is why the big news around moving the character limit to the "it's Twitter because it's 140 chars" to the new 280 chars (gasp, it's DOUBLE! WTF) was such a big deal - mainly because they had nothing else to announce and were changing really one of the only things that people perceived was different about Twitter.

For the first time in its 12 years of existence, Twitter recorded a profitable quarter, reporting profits of $91 million in Q4. To me it's not that they reported a profit but why did they report a profit? Here's why:

  1. Adtech improvements: Focus on and investment in adtech that provided better targeting and measurement results for advertisers.

  2. Reduction of losses: Although it recorded slightly less revenue in 2017 than in 2016, Twitter also learned how to cut its net losses by a few hundred million

  3. Better engagement: Its expansion of the character limit from 140 characters to 280 for users resulted in an engagement spike.

The first two speak to operations and improvements in the business, but I think the last one is the most interesting: There's hope for Twitter. And going back to a post I wrote when Twitter changed the 140 to 280, it was my theory that this improves engagement in the platform - if nothing else because 280 chars is 2x the copy space so time spent could go up by that much, just as a rough calculation.

Social networks live and die by one thing: attention. Attention is translated as time spent and engagement. If Twitter increased engagement, they are looking at the positive bump in a metric that has eluded them for a while. While user growth declines, the fact that they are increasing engagement is showing signs of life.

Twitter is an active and engaged platform, and while many have written it off in light of shinier objects like Instagram, there is significant opportunity to be had here, especially if engagement is on an upswing. Twitter just went profitable, partially because of engagement, and that's worth the time for a 280 char tweet.