Can Twitter Prove It Is Not Another Facebook?

by CXOtoday News Desk    Apr 30, 2014

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While Twitter may be trying its best to boost user growth in recent months, nothing seems to be working for the company, at least that’s what the investors believe. In its second earnings announcement as a public company, although Twitter more than doubled revenues of $250 million beating its own forecasts and the expectations of investment analysts, user growth and engagement has not grown the way it should have. This has in fact become a serious concern for the investors who believe the social media site has a lot of potential to grow.

The problem started and continued especially in the last two quarters. Twitter said it had 255 million monthly users globally in March, up 5% from 241 million at the end of December, which is modest, but ended a quarter in which monthly active users rose less than 4%. However, there is a hitch here. Twitter’s user growth and engagement has often been compared to that of Facebook. However, analysts believe it is here that Twitter needs to assert and prove that it doesn’t try to be more like Facebook.

Not another Facebook

A Forbes article points out however that could mean that Twitter will never grow to Facebook’s size. That would indeed be disappointing to many. But it notes that the problem is that most investors and advertisers alike still don’t understand that Twitter isn’t Facebook and never will be, but it has its unique potential.

And there is no doubt that Twitter is a potentially successful advertising medium, with ad sales more than doubling last quarter. Craig Elimeliah, a VP and director of creative technology at the ad agency RAPP, said in a Forbes interview that most people don’t understand the true reach of Twitter, which extends well beyond the Twitter app and website to television, news sites, blogs, and even our culture at large.

Expectations of Twitter growing into a communications utility that Facebook has become are “unrealistic and divorced from reality,” said Brian Wieser, an analyst at Pivotal Research to Reuters. “Twitter is and will remain a niche medium, and a very powerful one.”

Engagement is the key

While user growth may not be what Twitter is vying for, what they have to work on its user engagement – that’s where they can have the competitive edge, points out an analyst.

But Mashable suggests that even engagement numbers for the social network were also disappointing. The company reported that timeline views, its preferred engagement metric, increased by 15% year-over-year in the first quarter. By comparison, timeline views for the fourth quarter of 2013 increased by 26% year-over-year.

Even if it remain more of a niche service group, it has to prove its worth to investors, who currently were not convinced and punished the stock, sending it down more than 20% overnight, says a Mashable report.

“Twitter - the platform - we believe is already incredibly mainstream,” Chief executive Dick Costolo said at the conference call. The challenge, he added, was to convince the world to see the “value of the logged-in experience.”

Analysts believe it is time Twitter should work on its strength. While, overshadowed by the usage figures, Twitter posted better-than-expected revenues this quarter, and therefore needs to steadily refine its targeting capabilities. It should now showed signs it is better able to present ads based on what it thinks each user would be interested in, thereby attracting investor’s attention in a unique way – proving it’s not another Facebook!