Twitter as we know it is over. While the early release of ugly revenue numbers sent the company’s stock spiraling Tuesday, the actual quarterly earnings report that followed that afternoon was even worse. Twitter is acquiring users more slowly, particularly on mobile. It is failing to monetize these users as well as expected. And it is tapping other companies like Google, with whom it will partner to take advantage of its DoubleClick ad-serving platform, for lifelines. As a consequence, the ultimate value of the social network’s nearly 300 million users is looking significantly lower than previously thought. Twitter is well aware of these factors. Its recent actions signal that it is trying to redefine its business, not as a service that monetizes its users, but as a crowdsourced media platform and advertising agency—a dangerous bet that is unlikely to pay off.
Twitter’s strength is being the pulse of the Internet, the place where news gets broken in 140-character messages, where important topics start trending the second they enter the collective hivemind, and where politicians and celebrities and thinkers of all stripes can make announcements without the bother of a press release or the filter of the media. Yet this has always made Twitter Janus-faced: Is it a real-time news aggregator or a social network? More importantly, how will it make money? The conventional wisdom was once that Twitter would monetize its users by showing them ads that are extremely relevant to them. It is now obvious that Twitter’s future does not lie in a Facebook-like model, but in something else entirely. Twitter sees its user base, whose growth is flattening, not as customers but as content producers. In which case, who are its customers?
On the earnings call, Twitter CEO Dick Costolo specifically attributed the quarter’s revenue shortfall ($436 million, short of a projected $440 million to $450 million) to the underperformance of some of Twitter’s new “direct response” advertising products that have not performed as well as expected. Examples include Twitter’s “mobile-app install” ads, which offer a direct link to install an advertiser’s app. While Twitter hasn’t mentioned any new direct-response strategies, Costolo said it hopes to boost its advertising revenue by acquiring TellApart, “a leading marketing technology company providing retailers and e-commerce advertisers with unique cross-device retargeting capabilities.” This is a bad omen. When Google bought DoubleClick, it was buying DoubleClick’s utter dominance in the advertising sector, not its technology. TellApart doesn’t have that kind of dominance; Twitter’s purchase will get it TellApart’s technology and consumer profiles. Neither merits a headline announcement in an earnings report.
But the acquisition of TellApart does tell us something:, that Twitter is now trying to monetize nonusers, people who don’t have Twitter accounts but might read it anyway. That’s because Twitter is running up against the limitations of its interface, which makes monetizing active Tweeters difficult. For starters, Twitter can’t collect useful data about its users the way Facebook can; its 140-character limit hampers it. And because Twitter is public, people keep less of their lives on it. Tweets are less valuable as a key to profiling users than they are as an attractor of eyeballs. I’ve previously discussed the unique advantages and disadvantages of the public-private hybrid discourse produced on Twitter, but the flip side is what that unique hybrid amounts to in terms of monetization: It’s mostly a downside.
by David Auerbach, Slate | Read more:
Image: Natalie Matthews-Ramo
Twitter’s strength is being the pulse of the Internet, the place where news gets broken in 140-character messages, where important topics start trending the second they enter the collective hivemind, and where politicians and celebrities and thinkers of all stripes can make announcements without the bother of a press release or the filter of the media. Yet this has always made Twitter Janus-faced: Is it a real-time news aggregator or a social network? More importantly, how will it make money? The conventional wisdom was once that Twitter would monetize its users by showing them ads that are extremely relevant to them. It is now obvious that Twitter’s future does not lie in a Facebook-like model, but in something else entirely. Twitter sees its user base, whose growth is flattening, not as customers but as content producers. In which case, who are its customers?On the earnings call, Twitter CEO Dick Costolo specifically attributed the quarter’s revenue shortfall ($436 million, short of a projected $440 million to $450 million) to the underperformance of some of Twitter’s new “direct response” advertising products that have not performed as well as expected. Examples include Twitter’s “mobile-app install” ads, which offer a direct link to install an advertiser’s app. While Twitter hasn’t mentioned any new direct-response strategies, Costolo said it hopes to boost its advertising revenue by acquiring TellApart, “a leading marketing technology company providing retailers and e-commerce advertisers with unique cross-device retargeting capabilities.” This is a bad omen. When Google bought DoubleClick, it was buying DoubleClick’s utter dominance in the advertising sector, not its technology. TellApart doesn’t have that kind of dominance; Twitter’s purchase will get it TellApart’s technology and consumer profiles. Neither merits a headline announcement in an earnings report.
But the acquisition of TellApart does tell us something:, that Twitter is now trying to monetize nonusers, people who don’t have Twitter accounts but might read it anyway. That’s because Twitter is running up against the limitations of its interface, which makes monetizing active Tweeters difficult. For starters, Twitter can’t collect useful data about its users the way Facebook can; its 140-character limit hampers it. And because Twitter is public, people keep less of their lives on it. Tweets are less valuable as a key to profiling users than they are as an attractor of eyeballs. I’ve previously discussed the unique advantages and disadvantages of the public-private hybrid discourse produced on Twitter, but the flip side is what that unique hybrid amounts to in terms of monetization: It’s mostly a downside.
by David Auerbach, Slate | Read more:
Image: Natalie Matthews-Ramo
