Twitter announced its first results as a public company yesterday, and Wall Street did not respond well. I never get caught up in quarter-to-quarter financial results on their own merits, instead preferring to look at the bigger picture. In all the conversation about Twitter’s financial results, I think their bigger issues are largely being overlooked. This is coming from someone who was early to note Twitter’s potential emergence as an important platform. <pat self on back; rarely do we analysts get something so right.> In early 2008, I wrote a research note entitled “Twitter: The Most Important Platform You’ve Never Heard Of” [full access to Gartner clients only; ping me if you want my original note on the subject].
I still find Twitter a hugely useful, interesting and fun platform. However, as a business, they have some significant challenges to both growth and monetization. So, what are those challenges?
- The out-of-box experience stinks. The learning curve for Twitter is steep, measured in weeks or even months. Only the most committed individuals are willing to go through that steep curve. Finding relevant client software, building follower lists, and identifying interesting people all take way too much time. The industry is littered with good products that had bad out-of-box experiences, names you’ll never remember because they never achieved the market prominence that Twitter has managed to achieve. Compare this with Facebook, where you have a positive experience from almost the moment you sign up, with news and pictures from your family, friends, colleagues and classmates. Twitter’s steps to address this issue have been woefully inadequate. This is not just a home page redesign.
- You don’t need to be on Twitter. It would be one thing regarding the learning curve if you absolutely had to be on Twitter but except in narrow circumstances, the ordinary person can find what’s on Twitter elsewhere. News outlets routinely mine Twitter for insights and information and present that information to users in a much more consumable fashion. Not everyone needs to drink from the firehose. Even I, an avid Twitter user, probably get more than half of the information contained in my Twitter feed from other sources (Facebook, news outlets, etc .). If you need the absolute real-time feedback that Twitter provides, it’s a must have. If you don’t, it’s not necessary. For example, I urged my parents to be on Facebook (so they could see pictures of their grandkids). My mother, who’s really technologically savvy from way back, has always asked me “should I be on Twitter.” I’ve told her no each and every time she asks.
- You can take breaks from Twitter. Facebook is an easy browse, usually containing something that’s interesting to me. That’s often how I begin my day, even before getting out of bed. (And I’m not as strange as you’d think, at least with regards to this behavior.) By contrast, Twitter requires an investment of energy and engagement. You don’t get very much from a two minute perusal of your Twitter feed. It’s just too random, full of noise and a small snapshot of a much bigger picture.
- You don’t get great engagement on Twitter. 140 characters is easy…except if you want to have a conversation. I’ve had some great conversations on my Facebook wall, with dozens of thoughtful responses. The engagements on Twitter are necessarily much shorter, more random, shorter in real-time duration, and generally lack context and history. I’d argue you get interaction on Twitter, not engagement.
- Twitter’s a lousy platform for advertising. All this and more makes Twitter a lousy platform for advertisers.
- As with other social platforms, advertising is an intrusion into a conversation. It’s not a natural adjunct, even value-add, as it is with, say, Google search.
- Twitter doesn’t know that much about me. Facebook has a rich picture of my likes and behaviors. And with Facebook Connect, its information base extends far beyond Facebook’s own walls. Twitter knows what I tweet and retweet, and little more. It makes it almost impossible for Twitter to deliver high value targeted ads.
- I find it easier to ignore Twitter’s in-stream sponsored tweets than I do Facebook advertising. Facebook ads, precisely because they’re not just in my news feed, stand out from the feed. Now I’m not holding up Facebook advertising as a model of how it’s done. Quite the contrary. I find my Facebook advertising experience almost laughable. But Twitter’s is even worse.
- Maybe 250 million Twitter users are enough. Metcalfe’s Law, often applied to social networks, posits that the value of a network expands based on the square of its number of users. I’m not going to argue whether or not it’s relevant to social networks, or whether the square is the right multiplier. But for most social networks (e.g., Facebook, LinkedIn), the more people in the network, the largely better it is for that network’s users. I don’t believe that’s the case with Twitter. After a while, more users just equates to more noise. Tweetchats are great when there are small tens of users, just random noise when you get to 50 or more. How many retweets do I need of the same news story or picture of cats? I follow about 6,000 people on Twitter and even ruthlessly putting them into lists and managing my Tweetdeck columns, I know my stream is ultimately a random mess.
I love Twitter and have averaged almost 10 tweets a day for six years. Yeah, I know that’s ridiculous. But therein lies Twitter’s problem. Maybe this is what it is and for all of us, except investors, that’s enough. But will that sustain a business? Maybe, maybe not.