To Dick Costolo, there’s gold in them thar tweets, and Twitter has just begun to mine it.
Mr. Costolo, Twitter’s chief executive, enthusiastically sketched out on Wednesday many of the new revenue streams the company plans to tap. During a keynote address at a technology investors conference in San Francisco hosted by Goldman Sachs, Mr. Costolo did not break a lot of new ground, but he tried to paint a picture of a company that had finally gotten its house in order after a 2014 filled with executive firings, missed product deadlines and sluggish user growth.
Twitter’s core business of selling ads that are inserted into the flow of tweets that every user sees has plenty of room to grow, he said. The social network’s ideal model is for ads to make up about one in 20 tweets that the average user sees — the same level that Facebook strives for. “We’re well below that now,” he said.
Mr. Costolo is eyeing video as another potential treasure trove. “Marketers like that kind of storytelling,” he said. And the shift to mobile video, which is also being chased by other tech giants like Facebook and Google, offers an easy way for Internet companies to snag more of the ad dollars currently devoted to television.
To better capitalize on the trend, Twitter recently released tools to make it easier to shoot, edit and post video directly from its mobile apps. And shortly before Mr. Costolo’s appearance Wednesday, Twitter announced it was buying Niche, a New York ad agency that specializes in helping popular content creators on Vine, Instagram and other visually oriented social networks to connect with brands that are willing to pay them to promote their products. Although Niche is still tiny, it takes a cut of the transactions it brokers, potentially offering Twitter another way to profit from advertisers’ rising interest in video.
“Content creators want to go into an ecosystem, deliver a great experience to users and tell stories, and then make money from it,” Mr. Costolo said.
The company is also expanding its efforts to extend its reach — and sell ads — beyond its core base of 288 million monthly users, he said.
A new partnership with Google to include tweets in web searches will drive new traffic to Twitter’s service. And people who don’t yet have a Twitter account will soon see a range of the best content pulled from the network — and eventually an ad or two. (The upcoming Cricket World Cup will be the first large-scale public test of the new home page.) People who decide to sign up for an account will find it easier to make sense of Twitter through its new instant timeline feature, which it began testing on Android phones in late January and on iPhones on Tuesday.
Asked about the sale of Twitter’s data to other companies, Mr. Costolo said the company realized there was a lot of money to be made by helping corporations make sense of the daily flow of a half a billion tweets. It bought Gnip last April to give it a base of analytical tools, and now Twitter is working with software companies like IBM to provide smarter analysis to corporate customers.
E-commerce, particularly the sale of time-sensitive items like tickets, is another area where the company has taken only baby steps. “We’re really try to find the magic,” he said.
Mr. Costolo has even taken a page from Facebook, Twitter’s much bigger rival, and embraced the power of software algorithms that try to find the best, most relevant information for each person rather than simply present a long string of tweets in reverse chronological order.
“The biggest driver on the growth initiatives are the algorithmic back-end changes” to Twitter, Mr. Costolo said. Essentially, Twitter uses computers to analyze various clues to a person’s interests and then leverages that information to select tweets to feature in e-mailed digests, alerts about tweets your network of contacts are interested in and newer features like its recap of top messages since you last logged in.
Investors seem to be buying into Mr. Costolo’s vision. While Twitter has struggled with user issues, including a rise in hateful speech on the service, the company has consistently impressed Wall Street with strong revenue growth. It reported better-than-expected revenue for the fourth quarter last Thursday, and the stock has risen about 15 percent over the four trading days since then.
Mr. Costolo praised the company’s advertising team, led by Adam Bain, and said that marketers were pleased. “That’s all working extremely well for us,” he said.