Twitter Inc. (TWTR) Expands Ads Within Tweets To Third-Party Apps Using MoPub

Twitter is expanding the reach of its ads. Twitter timelines that are displayed in third-party apps will now be able to show ads within their feeds, creating a new revenue source for both parties.

Twitter announced the change in a blog post to app developers Tuesday. The update is the latest in a series of changes the microblog site has made to improve its product for developers since CEO Jack Dorsey renewed his commitment to that constituency at Twitter’s Flight conference in October. For example, embeddable timelines were redesigned and Twitter allowed a custom video player.

But this update is the latest push in making Twitter a more attractive tool for app creators to use for revenue, as it faces competition for developers from Facebook’s Audience Network, the Google Display Network and Yahoo’s mobile ads. Twitter’s ads are powered by MoPub, an ad inventory startup the company acquired in 2013.

Developers have long been able to use MoPub, but this change allows direct integration of ads into Twitter timelines for iOS and Android apps. “[W]e’ve made it easy for you to plug your app into the world’s conversations and one of the world’s largest mobile ad exchanges at the same time,” Twitter wrote in a blog post.

For Twitter, the move is also a way to convince investors and advertisers of the power of its reach beyond the core Twitter app. Twitter’s user growth has stagnated over the last year. The company’s 310 million monthly active users pale in comparison to Facebook’s 1.59 billion monthly actives or Instagram’s 400 million. The decline in growth has led some advertisers to decrease their ad spend on Twitter.

Marketers say the more pressing problem for Twitter, however, is user growth. "Twitter's commercial engine has done a great job of monetizing the platform to date," said Will McInnes, chief marketing officer of social media analytics company Brandwatch. "File this under 'solid optimization but not addressing the elephant in the room.'"

While Twitter has been churning out record revenues, growth has not met expectations. Twitter reported first-quarter of 2016 revenue of $595 million, a 36 percent increase year over year, but analysts had pegged a 39 percent increase. “Brand marketers did not increase spend as quickly as expected in the first quarter,” Twitter admitted last month.

Twitter does not break out how much revenue MoPub garners for it. The amount is buried within the "data licensing and other" category of its earnings reports. That section also includes revenue from selling enterprise services under Gnip, a social data analytics company Twitter acquired in 2014. The amount is far lower than revenue from advertising within Twitter, but it has been growing.

The move comes as Twitter has continued to refine the product in an effort to attract more users. Twitter is testing a “Go Live” button in the main app that allows one-tap streaming from its live video app Periscope. The company also is reportedly tweaking the 140-character limit by eliminating links and photos from the count.