Twitter in 3 challenges: relevance, innovation and revenue
Jan 31, 2016
Twitter faces challenges in relevance, innovation, and revenue growth as it contemplates increasing the maximum characters per post, risking its unique identity and struggling to keep up with competitors.
The rumor is not new, but now, it seems serious. Twitter is set to change the cabalistic number of maximum characters per post from 140 to 10,000. This is not just a technical decision, but the deepest change in digital semantics.
Pressured by unreasonable growth expectations (which largely formed in spite of themselves) and failing to launch any new product in recent times, the microblog is forced to risk its own identity in a market that doesn't forgive mistakes.
Looking through the eyes of publishers, agencies, advertisers, and users, it's hard to find a problem. In the next two years alone, revenue is only expected to grow (with percentages not only in double digits, but also with numbers larger than the omnipotent Facebook). The user base is growing at a slower pace, true, but by 2018, it should reach close to 350 million accounts. The market share of digital advertising is expected to double by the end of next year, compared to 2014 (keeping in mind that the total ad revenue grows about 15% per year and should be around US$700 billion in 2018).
Ok, 2015 was a red year for Twitter (close to US$8 million), but according to a USA Today article, at this rate, the company would have enough energy for 412 years of operations before draining its coffers. The determination of Dorsey, Costolo, Stone et al not to compromise the user experience has kept the service far from potential customer rebellions.
If not, why change? And where is the trouble in the pudding? Once again, the problem is expectation.
One of the thorns is the stagnation of growth in the U.S. With Asia isolated in competitors of other languages, there is no hint that Twitter can present growth rates in its user base that are close to what Facebook had between 2008 and 2015 (surreal 11% per quarter). In the Americas and Europe, the base has already grown what it could within the possible.
This stagnation throws the responsibility of growth on the rest of the Western world. An observer may argue that the universe of inhabitants and/or Internet users who already use Twitter is small compared to the number of Internet users or inhabitants in this perimeter, therefore, leaving open a vast margin for growth. The reasoning is invalidated by a demographic issue: Twitter is a text-based tool and requires a level of literacy that these universes of potential 'unexplored' users do not have and there is nothing to suggest that they will have.
Here is a point about the "value" of the platform: Twitter is the most relevant social network for society. There is no public figure in Western countries (and many non-Western ones) who does not mark their presence on Twitter. More than that: the tool is now more important than official press releases and basically Twitter is the space where anyone, entity, or company can have their voice heard. It is no coincidence that all the characters, companies, or publications in this or most texts on media and technology have their communication based on a microblog account.
Unlike Facebook, which explores the
, Twitter is capable of creating infinite communication networks that weave by interest, without an algorithm determining the expansion of information and, to some extent, manipulating it. As a public utility, Twitter is unbeatable and arguably one of the safest pillars from a journalistic, credibility, and information standpoint on which digital media is establishing itself. Unfortunately, this pedigree doesn't count in Silicon Valley or on Wall Street, and all of Twitter's importance to society is sidelined when investors call the shots.
The problem, for Twitter, lies in the results of its performance (financial and engagement) and the recent weak record of product updates. None of the updates released by the platform managed to galvanize its user base to significantly increase their connected time (on the contrary, the network's time spent fell about 30% between 2014 and 2015, according to data published by Morgan Stanley), nor did they bring significant revenue flows. Twitter Moments, the most important recent release, bet on a "humanization" of the curatorship, momentarily leaving aside the non-intrusive approach that creates big data ducts without human intervention/manipulation. Although it did not fail, the novelty did not have the expected impact and did not decrease the pressure on the company.
At the end of January 2016, the stock price is around US$17, just over 20% of the US$73 at its peak. In the last 6 months several important executives have left the company (most of them linked to product and performance). Despite all its virtues, Twitter is not the first (Facebook), second (WhatsApp), third (QQ), or fourth (FB Messenger) social network in size - but the ninth. It's hard to deny that the product's relevance is fading, at best, in relation to the competition. Twitter suffers in the flesh a dysfunction of the digital media economy, which still works with parameters inherited from traditional media - such as the quantity of ad display only that good justifications and good intentions end up in the common ditch when evaluated by market logic and a vital service runs the risk of distorting itself so that some anonymous shareholder throws a few more zeros to the right in his account.
What impact can such a significant change as increasing the maximum number of characters per post have for Twitter? In terms of relevance to the platform, little. Heavy users of the microblog will not leave the platform because of this. It is also unlikely that the new post template will create a space in the technology scene that does not already have heavyweight competitors (Tumblr, Wordpress, etc). A little less certain is the possibility of revenue growth following this change - more 'space' on the platform can definitely bring more money, but it is not a certainty.
The biggest threat with the "loss" of 140 characters is the identity of the service, the strongest and most singular characteristic of Twitter. This design is one of the most striking ingredients not only of the social network but also of the new semantics that was born with the digital. It is no coincidence that, for so long, Twitter's creators have postponed radical changes. Time will tell whether the reluctance was grounded or not.