This article first appeared in the Lansons Autumn Newsletter, which reflects on the world of business since the UK referendum result. Read the entire newsletter here.
Twitter’s mission is ‘To give everyone the power to create and share ideas and information instantly, without barriers’, but it looks like these dreams were not possible for the social network as an independent company. The process of selling Twitter has begun.
Potential suiters Google, Apple, Disney, and Salesforce have all reportedly ruled out the possibility of a takeover. Leaving only turbulent times ahead for Twitter as the social network tumbled another 5 per cent and future bids look abysmally unlikely, a disappointment to investors much like its stalled user growth.
It’s no secret that Twitter has never made a profit in all its history and continues to struggle with trolls (people who start arguments and upset people, mostly for fun, on the internet). The social intricacies of interaction has no doubt been a barrier to new user growth and the shift to video has put pressure on Twitter to move beyond its limited 140 character count.
Whilst the latest statistics from Twitter may paint a picture of doom and gloom for investors, arguably for its users there is another story. Twitter has become the social network for customer services interaction, still giving those with profile the ability to build their own following and not rely so heavily on traditional media, and regularly informs mainstream media of breaking stories and insider information.
The challenge to remain relevant and deliver revenue
Twitter faces three critical issues: It needs to be profitable, user growth must be rekindled, and the culture of the social network needs reviving/cleaning out.
These issues formed the bedrock of Twitter’s CEO, Jack Dorsey, returning to the social network he co-founded, replacing Dick Costolo. In that time the social network has made an effort to monetise its 313 million monthly active users through offering new ways to share content and introducing features that simplify the Twitter experience for new users.
Only a week after Dorsey’s appointment, Twitter launched Moments, a product that provides a magazine view of Twitter’s most popular news stories and shared items. Apart from acting as a social news service, Moments is easy to understand, allowing people to enjoy Twitter without necessarily engaging in parts of its technical social etiquette. Some companies have advertised with Moments, with the first being Tesco and their #FeelGoodCookBook.
Other developments have taken place, especially when it comes to video. Twitter’s acquisition of Vine in 2012 was fully realised when Vine videos could be integrated into tweets in 2015. This was the same year Twitter acquired streaming start-up Periscope, which was integrated into tweets in early 2016.
Twitter’s new capabilities provide a rich tapestry of possibilities for businesses looking to become their own media companies, joining in conversations with customers or even B2B stakeholders. It’s just that tricky question of how to make a profit that needs answering.
The $20 billion question
When Microsoft bought LinkedIn for $26 billion, the share price of Twitter jumped as investors licked their lips at the possibility a similar bid coming their way. Ever since the dot com bubble burst, you would have thought investors would have been more restrained when investing into social media ventures. It’s easy to be carried along with the hype and when Twitter had its IPO in 2013, the mood was that this could be the next Google and its advertising network would be sure to grow, along with its user-base. Now we’re three years on and the picture is far different.
Arguably, Twitter needs to convince potential buyers that there is something unique to purchase. As the conclusion of this Recode article quite rightly observes,
“While Twitter’s foray into mobile video distribution is compelling, sources note that Apple can benefit from that without owning or managing it. And, of course, paying upward of $20 billion for it.”
Why invest in a service that would be cheaper to build yourself? The only possible answer to that would be if a certain internet culture already exists that is profitable.
Whether social media is an online touchpoint for purchase or simply referral is a debate that continues in the marketing industry. Quite often this isn’t a case of a social network’s capabilities, but if users are willing to transact through a social site.
We know online advertising works, Facebook has successfully shifted from a social network to becoming an advertising network – people just aren’t buying on Twitter. The closest you can get is pushing traffic to a website, but this means comparing Twitter to successful services like Google AdWords. Forays in social video and socially curated magazines (Moments) deliver results on Twitter, but the marketing industry hasn’t made these primary or default advertising tools.
The birth pains of change have begun. Buzzfeed has reported that a number of Twitter’s 25-person commerce team have left the company and others reallocated into two separate product teams. Rumours and reports have continued throughout the year of senior hires leaving the company. It’s unclear how related Twitter’s financial performance is to the news that Twitter is shutting down their global engineering operations in India.
Is Twitter really worth a similar investment as Microsoft made in LinkedIn? Can Twitter offer itself as a package rather than a business formed of separate service acquisitions? What will happen if a buyer isn’t found?
Time will tell
The crystal ball remains foggy at present. Unless new buyers emerge, then Twitter looks unsaleable, at least for the expected price tag. As communications consultants, this could reveal a glimmer of doubt in our investment in Twitter as a social network. The mood in the media industry is indifferent: Twitter continues business as usual, but everyone acknowledges that changes/investment is required to maintain the network long-term.
For the moment, nothing changes. Twitter continues as a critical part of most social media programmes and an established communication channel among consumers. It remains (in my opinion) the most lucid social network available, the only real way for normal people to connect with the rich and famous, and a flexible site for businesses to establish their brand.
If the worst happens, and no buyers step forward, then we may see Twitter being dismantled piece-by-piece. The data will remain as it’s a social currency, but only the useful parts of Twitter will survive. It will happen slowly, similar to the process Google Plus is currently experiencing, and the successful services that once formed Twitter could be bought by the very tech companies who are currently rejecting the social sites’ current hefty price tag.