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Is Twitter About To Crash And Burn?

twitter.jpg

Twitter has got issues.

Not technical ones - you can still fill the internet with your 140-character witticisms and observations. They've got endemic problems in more pressing areas - like growing, and making money. 

On 11 June, Twitter Inc chief executive officer Dick Costolo announced, with startling abruptness, that he would be stepping down after six years in the role. Jack Dorsey, one of the company's co-founders, would step in to handle things in the interim, while the company looked for a new CEO - searching both internally and externally. 

To highlight just how much Twitter has been struggling as a company under Costolo, one needs only look at the Wall Street stock reaction to the announcement: Twitter shares rose 3.6 percent to $37.17, suggesting investors thought Twitter to be worth more without Costolo, to the tune of $900 million (£500m). Which is an astonishing amount of money.

So where's it going wrong?

Twitter

Dick Costolo out of ideas?



While Twitter's stock price has remained relatively healthy in recent years, its growth rate has been worryingly slow compared to other social media platforms: after gaining 33.3 percent more monthly active users in the first quarter of 2010, it's failed to bring in new users on a similar scale, falling to a growth of just 1.4 percent in the final quarter of 2014. Should it stop growing, or even shrink, it's going to sound alarm bells for investors - hence Costolo's shuffling.

Why? Because, in short, Twitter hasn't done anything significantly new in that time period to encourage non-Tweeters to take up the art of short-form status sharing, while groups like Facebook and Snapchat continue to provide a constantly shifting (sometimes improving) user experience, perpetually striving for innovation in their markets.

What did Twitter give us? Twitter Cards. Sure they also bought Periscope in a bid to change things up and more recently a 'While you were away...' feature but, crucially, for the monetising aspects of the company, there's been nothing to encourage advertisers to the largely static platform. Reuters reports that Twitter has failed to make significant ground in the US digital advertising market, moving from 1 percent of the market in 2013 to 1.7 percent in 2014. Compare that to Facebook's rise from 7.6 percent in 2013 to 10.4 percent in 2014, and you get a sense of just how far behind Twitter is in the money-making game.

Twitter

Twitter isn't about to die overnight, nor is it about to see all of its investors pull out and head to the quick fix of Snapchat or Meerkat. But if it doesn't provide a system that gives marketers faith to spend money on it soon, or it dips into a period of shrinkage - even if it boasts more users than rivals - then the significance of the 140 character update could slip from prevalent importance to a niche, weird thing some of us did on the internet once. A bit like MySpace and that video with those girls and that cup.

Written by David Cornish, follow him on Twitter: @D_Cornish

 

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