How is it possible that Twitter’s growth is stalled? How?!
When, for example, Peyton Manning announced to all and sundry on Super Bowl Sunday that he planned to celebrate with "a lot of Budweiser," where did Budweiser go to clarify to the Federal Trade Commission the viewing audience that it in no way paid Manning, who happens to own two beer distributors, to make that comment. Twitter, that's where!
And, speaking of Super Bowl Sunday, when those ads for constipation aired during the game, where did America turn to talk about this embarrassing and sensitive how some advertisers are just bound and determined to ruin even the most sacrosanct of American traditions condition. Twitter, of course. According to Amobee, there were some 10,250 Tweets about constipation in the first half of the Super Bowl.
When we need a super bowl ad for people with opioid induced constipation... It might be time to admit we have a problem.— Aaron E. Carroll (@aaronecarroll) February 8, 2016
So Why Can't Twitter Grow?
On Wednesday, Twitter reported its fourth quarter and fiscal year ended Dec. 31 earnings.
The company reported that its total revenue for the year was $2.2 billion, a 58 percent year-over-year increased. Total number of advertisers reached 130,000 in the fourth quarter, a 90 percent jump year over year. Fourth quarter revenue totaled $710 million, an increase of 48 percent year over year. Of that amount, $641 million was due to advertising revenues, another 48 percent increase.
The numbers weren’t all pretty, of course, this is a company in transition after all. The bottom line was that for the fourth quarter the company posted a net generally accepted accounting principles (GAAP) loss of net loss of $90 million.
And oh yes, user growth remained flat at 320 million compared to the previous quarter. It was up 9 percent year over year but try telling the stampede of shareholders exiting the door that.
To be fair, it was the first time Twitter failed to show any user growth in an earnings report. And to be even fairer, user growth is THE defining metric by which Twitter must prove itself.
So, back to the original question: how is it that Twitter cannot grow?
There Are Theories
One is that users will go up as Twitter turns its ship around. And besides, did you see the 90 percent increase in advertisers?
"Not being able to add any new active users in the last quarter will disappoint some, particularly investors, yet it did see active advertisers go up by almost 90 percent year on year," according to Sotirios Paroutis, an associate professor of Strategic Management at Warwick Business School, who researches Twitter.
"Plus, historically, Q4 has been a slow quarter for Twitter, while in 2016 the US elections and the Olympics will be two big events that will be expected to help push their active users up."
Another is that Twitter has good ideas: it just need to execute them better. Paroutis has something to say about this, too.
"Twitter has delivered a number of product innovations, but these need to be less confusing for core users and attractive enough for new users," he said.
"The focus on 'live' and experiencing live events is a clear effort to explain Twitter to a wider audience, particularly the ones who haven’t experienced it before. This allows Twitter to connect multiple products when single events happen – making Twitter a more appealing option for advertisers. It also allows them to build a distinctive identity versus other social media offerings."
On the same day that Twitter’s earnings were announced, the company also unveiled its rumored change to the timeline – which had been furiously decried when the news was leaked earlier. How furiously? See #RIPTwitter
It actually is a pretty benign change and completely reversible if the user hates it.
Senior Engineering Manager Mike Jahr writes: "Here’s how it works. You flip on the feature in your settings; then when you open Twitter after being away for a while, the Tweets you’re most likely to care about will appear at the top of your timeline – still recent and in reverse chronological order. The rest of the Tweets will be displayed right underneath, also in reverse chronological order, as always. At any point, just pull-to-refresh to see all new Tweets at the top in the live, up-to-the-second experience you already know and love."
There are others too. A turnaround is hard to execute, especially when the CEO is only at it part-time. Millennials have moved on to other networks, the way Twitter works is confusing and it is just too much to have so many networks to monitor. Facebook has sucked most of the oxygen out of the room.
Theory of My Own
Now I would like to add one: Twitter is not growing because it is not maximizing one of its competitive strengths. Conversion rates for B2B marketers on its platform are very strong, topped only by LinkedIn.
According to a report [PDF] by Content Marketing Institute and MarketingProfs, 94 percent of B2B respondents reported that LinkedIn is the most popular media platform to distribute content, followed by 87 percent citing Twitter. Facebook comes in at 84 percent.
It’s not much of an edge, I’ll grant you. But work with me people. If we want our national conversation platform to stay weird enough for this:
My father thinks Marco Rubio's name is "Marco Ruffalo," please, please nobody ruin this for me.— Julieanne Smolinski (@BoobsRadley) February 4, 2016
then we have to encourage more of this: