Google (GOOG, Financial) and Twitter (TWTR, Financial) have once again come together, as both have signed a deal where searching Twitter will become easier. Twitter could have a massive distribution network that could beat that of Facebook (FB, Financial), with the help of Google Search engine. The deal allows Google to monitor the tweets posted on the Twitter. Google also benefits from the access to the real-time pulse of the world, where like-minded people connect and share their views which matter to each other. Twitter can benefit from the deal by exposing its content to an audience which is bigger than Facebook via Google search engine that produces searches of more than 2 billion on a daily basis. This could be the best way of acquiring new users for Twitter, as its user growth has been stagnant for the last few months.
The synergies for Twitter
Twitter would obviously benefit from this deal, as it could be more searchable on this platform of Google Search Engine. The click ratio could thereby increase for Twitter. Users may not actually need to search for Twitter manually. Instead if a trending Twitter post appears on the search page of Google, they may actually click on it and gain access to the tweet. Hence, logging onto Twitter would become more feasible for the active users. Google would promote Twitter’s interest to reach more masses than it has currently access to. What may be a surprising to investors is that such a similar deal had been struck way back in 2009. However, in 2011 the contract was not renewed again. Let's wait and see if the deal turns out to be a successful one, this time.
Weak user growth makes the deal imminent for Twitter
There is no doubt in accepting the fact that Twitter has signed one of its best deals in the fiscal year 2015, which could benefit it in many ways. As per the estimates there are more than 500 million people who land on Twitter pages as logged out users, which means the users are not registered as compared to the 288 million registered active users. Bloomberg sources have claimed that no advertising revenue deal has been made between Google and Twitter, but Google would likely pay “data – licensing” revenue to Twitter. Such revenue line has helped Twitter to grow from $16 million to $41 million in the past year and now signing this deal with Google means there is a lot of growth in “data-licensing” revenue yet to occur for Twitter. The number of Twitter users could have increased by 8 million in the final quarter of FY 2014 if the iOS 8 of Apple was not struck by an unforeseen bug. Thus, Twitter saw tepid user growth in the last quarter and lost around 4 million users on iOS 8. But it’s expecting to see better user count after the Google pact, with more tweets available on the search engine giant.
To conclude
Twitter and Google combination can prove to be a great thing this year. And investors are waiting to see the synergies being reflected through the financial numbers posted by Twitter in the upcoming quarters of the next fiscal year.Ă‚
