Twitter’s most recent revenue growth of 124% in the last quarter have landed the social media site under the microscope. We are beginning to see each one of its’ issues in High Def.
Investors are being cautioned to see the slow user growth as a red flag. Twitter’s current user growth primarily stems from third party applications like Foursquare, Facebook, instagram etc. These users do not interact on Twitter itself hence don’t see any of the ads on Twitter. According to a recent article by Wall Street Journal, the number of monthly active users of Twitter is 271 million, the same number for Facebook is 1.32 billion (about a third of Facebook’s).
The same article also mentions that non third party user growth rate declined for 4.4% to 3.9%. So if I am reading correctly, there is a growth but it has declined. Whereas third party application Twitter account holders is on an upward incline with the current rate at 14% and soon to climb to 25%. Facebook claims that users who access Facebook through third party is less than 5%.
Personally to me, Twitter seems to be a textbook definition of middle child (speaking from experience) – never as good as the older sibling (Facebook) and the younger sibling can do no wrong (instagram). The dismal criticism constantly received by Twitter seems to be a side effect of comparison to Facebook.
Let me remind readers that the in the first few years of Twitter’s existence, they did not have any sort of direct revenue generating model while Facebook was having a field day with advertisements. Twitter’s recent success was purely organic in the sense that the ads were viewed by active users but a lot of the content generated was by third party users via Instagram, Facebook, Youtube etc. during the World Cup which further increased interaction among the active users on Twitter.
The much criticized third party user growth could actually be a boon to Twitter where they provide content for discussion by active Twitter users – something not too common in Facebook.
Major companies, brands, celebrities still use Twitter. Browse any article online and you will notice that announcements made on Twitter by brands or famous people get more news coverage than announcements made on Facebook. Instead of appeasing to the masses and getting lost in the numbers game, Twitter should stay true to itself and work on tactics that would keep active users on the site. Experimenting with interactive features tailored towards the world cup proved to be a huge success. Back to the topic at hand, I would say Twitter’s biggest problem right now is not “slow” active user growth rate but living in the shadow of “big brother” Facebook.