Twitter’s Redesign Is More Than Cosmetic

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Twitter (NYSE:TWTR) stock jumped about one percent in early trading on Wednesday after news broke that the company is testing a redesign of its profile page. The redesign looks like a familiar blend of features from popular social media platforms like Facebook (NASDAQ:FB), Pinterest, and Google+ (NASDAQ:GOOG), where emphasis is placed on a much larger banner image and the user’s profile picture is delegated to a smaller panel in the left of the screen. This is instead of the profile image and bio being front and center.

Most significantly, Tweets themselves are liberated from the single-column timeline. With enough screen real estate, Tweet cards act more like tiles that are arranged to fill a wider space. A screen grab by Mashable‘s Matt Petronzio shows the layout in action. It looks like Tweets are still arranged chronologically, but the layout is a first step toward an alternative organization. Twitter has hinted that a future redesign could organize Tweets thematically or by topic to make browsing content easier. But why does the market care what Twitter’s profile pages look like?

The answer is that these cosmetic edits are expected to have an impact on the growth of Twitter’s user base, and perhaps on how well it can deliver advertisements to that user base.. Shares of the social media company fell nearly 25 percent after it reported earnings for the first time as a public company, beating earning estimates but missing growth projections. Twitter closed the year with 241 million monthly active users (or, MAUs), only about 60 percent of the active user base it wanted, according to people familiar with the matter who spoke to the Wall Street Journal.

MAUs grew just 3.8 percent sequentially, the slowest growth rate in a year and down from the 7.8 percent growth rate averaged in the first three quarters. Analysts, for their part, wanted to see MAUs closer to 250 million.

Changes to the platform’s layout are likely being made in light of this data. Twitter wants to make its platform more appealing to more people so that more people will use it. This seems like a pretty straightforward strategy, and it will be necessary if the company wants to grow in to its still-lofty valuation. More users means more exposure for advertisers, which means more revenue for the growing media company.

Optimizing the layout could also be attractive to advertisers beyond the number of eyes it can expose their content to. A more intuitive and visual-heavy design means advertisements can be inserted into the timeline more naturally. This is a strategy championed by Facebook, which demonstrated that monetization of social media may best come from high quality advertising, not high quantity advertising.

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