How Deep Twitter Is In Troubled Waters?
The company is not likely to grow at the pace or magnitude of Facebook or Snapchat or even Whatsapp for that matter. Not only it has been facing a lot of criticism from investors but the investor woes are also at its peak. Twitter woes deepen as lack of user growth threatens sales
Photo Credit : Reuters
This has long been a prevailing narrative. The San Francisco social media firm has been shedding users as its competitors just keep growing. From a financial perspective the site has been facing a tough time since the time it went for IPO 2013.
The company is not likely to grow at the pace or magnitude of Facebook or Snapchat or even Whatsapp for that matter. Not only it has been facing a lot of criticism from investors but the investor woes are also at its peak. Twitter woes deepen as lack of user growth threatens sales.
Let us explore which inherent problems are causing a mess for Twitter and what takeaways the Twitter turmoil has for the technology companies.
1) Inconsistent Vision about the Product
Twitter is still trying to define its role in the social media landscape. It's only bright spot is its streaming video plans. In last October, since Jack Dorsey replaced Dick Corstolo as the company's boss, more executives have left furthering the impression of an internal turmoil.
The confusion in terms of management is likely to further delay development of technology and the product idea as the need to drive user growth progresses. On social media, you see it's all related the user engagement helps in monetization.
It just launched a new marketing campaign that positioned itself as a breaking news engine, something which has the capacity to digest, distribute information at 'break-neck' speed, regardless of whether it's about global events, sporting matches, celebrity tiffs, or political conventions.
Twitter wants to be the digital, forward-thinking equivalent of live television, informing "what's happening around the world", scooping up select streaming rights from big sports organizations and TV networks to make the transformation.
For example, it's deal with MLB and NHL to stream baseball and hockey games, by which its aims to capitalize on both exclusivity and real-time nature of the events, giving Twitter an edge over competitors. There is still so much to prove.
2) Incapacity of Maintaining Revenue
Twitter has been falling of the perch, since the company reported its Q1 earnings stating that it added five million new users last quarter to bring its total user base to 310 million users, up from 305 million monthly active users in Q4 last year. Even the Twitter's stock is down nearly 10 percent due to lower than expected guidance for Q3. The big takeaway, however, is the year-over-year percentage growth of its revenue, which at only 20 percent is at its lowest since Twitter went public. A year ago, the figure was 61 percent. Two years ago, it was 124 percent.
Despite the mixed earnings, the perceived turmoil has given advertisers pause. While many brands find Twitter a seamless way to reach online consumers, advertisers feel that the platform is not as mature as Facebook or Google, which has kept them away from writing such big cheaques to the Twitter's account.
3) Incapability in Retaining Users
Foe newbies, Twitter too complicated to use, which has prevented potential users from signing up for the service and sticking around. So, it stands in a challenging position of keeping its regular users happy while making changes to attract a new audience.
Moreover, the future of social media lies in videos which is why Jack Dorsey, CEO Twitter Inc. has been pushing the staff to change even the aspects of Twitter's site that seem untouchable.
For example, Twitter has considered even lifting the 140-character limit in posts, which has been the format since the company started. The company might also change the "[email protected]" structure for replies on the site and display more popular tweets at the top of the user's feed.
Unlike Facebook, Twitter has always been strong on mobile, so ideally it should have had an edge as users and advertisers started spending less time on desktop computers but it did not pan out that way. And that's the precisely why it's lagging behind.
Very conveniently, Dorsey wants to be for Twitter what Steve Jobs was for Apple. A founder who came back to rescue his company. He has been trying to make Twitter easier to use, creating "moments" function, where users can see the big stories of the day but there's so much more to cut out.
Twitter is still not profitable. The cheaper its shares become, more it is likely it is to be snapped up by another internet or telecoms companies.
The public markets have become especially unforgiving to internet firms whose growth has slowed. Twitter's struggles are a cautionary tale to other technology companies that failed to innovate or adapt when they had time by their side. Its brand-name is succumbing to its own fame, recognition alone is not enough to save a company that failed to deliver on its high-flying promises.