What should Twitter be worried about?

by Shweta Verma    Sep 17, 2013

twitter

Twitter’s announcement to go public has suddenly put the social media giant under a scanner. Marketers and analysts are trying to weigh the factors that will go in its favour and the odds that may work against the company.

Although the company has not yet disclosed the exact time frame or financials of the offering, the market is already abuzz with speculations and estimations of its current financial strength. According to eMarketer estimates, the company will bring in $583 million in revenue from advertising this year, and $950 million in 2014. Twitter also earns revenue by selling the data in its raw feed of millions of messages every day.

Almost unperturbed by mounting investor pressure, the company seems to be going all out to woo the public with new products, ads and a whole new look. CXOtoday takes a close look at are some critical factors that are likely impact investor sentiment:

Slowdown in growth

There are reports indicating that Twitter has not succeeded in adding users at the rate it expected and this could pose a big hurdle for its IPO. According to Allthingsd.com, Twitter announced in last December that it had more than 200 million active users and CEO Dick Costolo had told employees that he expected to get to 400 million users by the end of 2013. But it seems Twitter has only managed 240 million users so far. If it continues to grow at this pace, it may reach only 260 million by the year end, which means a growth of only 30% instead of Costolo’s 100 percent mark. This is also much lower than its competitor Facebook, which had over 900 million users before it went public.

Lacks mass appeal

If one were to assess the popularity of Twitter, the tilt will be more towards the social elites, celebrities and media personalities. Facebook on the other hand has a much larger following among the masses. Says Forbes, “The central problem is that too many people still don’t get Twitter. Do a search on Twitter for ‘I don’t get twitter’ and Google will spit out 11.5 billion results. Even in Silicon Valley, presumably ground zero for Twitterati, you can still find a lot of folks who don’t understand why they’d want to use it… I don’t care what Ashton Kutcher had for breakfast, they’d say.”

No clear focus

Facebook is clearly seen as a platform for social networking, sharing pictures and jokes with friends and contacts. But on the other hand, Twitter is yet to emerge with a clear focus. Some look at it as a place to access breaking news, while some use it to dig into the lives of famous personalities. Social media enthusiasts complain that Twitter doesn’t have any effective filtering mechanism and there is no clear path on how to connect with “your kind” of people. So you just end up following celebrities. This often leads to early boredom, creating a large number of “Twitter quitters.”