It’s the abiding problem of the online age, and one that is far from being solved. Having millions of people using your product or service – or watching your video or listening to your music and so on – is no guarantee that you’re making money. What the internet gives in terms of accessibility and reach, it takes away in terms of the ability to monetise. The issues facing social media giant Twitter are a stark reminder of this fact.
There’s a wonderful scene in the BBC political comedy The Thick of It where a journalist cautions infamous spin doctor Malcolm Tucker about the dangers of a government wheeling out the celebrities: ‘What’s next? Ant and Dec as the new litter tsars? That’s when you know you’re 20 points behind in the polls.’
Over recent months, there’s been a little of that in what’s been going on at Twitter. First it was the change from the old favouriting stars to hearts. Then the introduction of Moments, a curation tool to allow users to see what’s happening at any given time, thus making the social tool competitive with news organisations. And in January, the company confirmed the existence of ‘Beyond 140’, a project looking to expand the original USP, the 140 character limit, to as much as 10,000.
Is this a sign of panic? An attempt to still be seen as cutting edge despite the emergence of younger, hipper social platforms? Or is it simply part of a strategic shift that will leave the company and its product stronger?
Underlying Twitter problems
Twitter’s essential problem is the same as any social media platform, the two-fold issue of being reliant on advertising money for revenue and being in a highly competitive marketplace. The millennials – bless them – have an almost ingrained desire for newness and famously short attention spans. As Twitter has become ‘useful’ for marketers, celebrities engaging in self-promotion and political journalists gossiping, so Twitter has lost its shine among younger people who want a platform that is genuinely social – i.e. somewhere they can communicate with their actual friends. Thus, visual media such as SnapChat and Instagram have stolen Twitter’s thunder and, for text communication, the millennials are all on WhatsApp. And that’s not to mention the new platforms such as Bubbly, Whisper and WeChat, which are not-so-patiently waiting for their tipping point moment.
All of this is serious. Not because Twitter doesn’t have any users left – plainly it does. It’s just that it’s not growing at anything like the rate it used to. At the end of last year, the platform reported that its number of active users totalled 307 million in the third quarter – a big number, for sure, but only a one per cent growth from the second quarter and a year-on-year growth of eight per cent. According to analysis by The Wall Street Journal, Twitter hasn’t reported a slower growth rate in any quarter since it went public in 2013.
Return of CEO Jack Dorsey
Partly because of this issue, Jack Dorsey made a return as Twitter CEO in October 2015 with a mission to turn things around. Unsurprisingly for such a high-profile move, the last three months has seen a lot of activity.
Along with the various changes to the product noted above, Dorsey has implemented large staffing cuts. His first major move was cutting eight per cent of the workforce, over 300 people, due to what he perceived as a lack of focus within teams and a bloated company structure. In a letter to employees that was widely circulated on social media, he wrote: “The [product] roadmap is also a plan to change how we work, and what we need to do to that work. We feel strongly that engineering will move faster with a smaller and nimbler team.”
While it’s too soon to say whether this move has been successful, it’s notable that there have been no high-profile hires since Dorsey’s return. Other than the return of Jessica Verrilli, a key corporate development executive, there have been no replacements found for key roles such as head of consumer video and head of design. The company is also still looking for a VP of communications, a head of corporate development and a CMO.
The uncertainty and product tinkering over recent months has, naturally, also caused concern on the stock market, compounding pressure on the company. At the time of writing, Twitter stock is down 24 per cent since Dorsey took the reins and closed under $20 per share for the first time ever. By point of comparison, the S&P 500 is only down one and a half per cent in this time and the Dow Jones Industrial Average down less than one per cent, meaning this steep decline cannot be written off because of poor stock performance generally.
In truth, communicating with Wall Street has been a perennial issue for Twitter. As Recode reported in July last year: “After the company reported what appeared to be solid financials, Dorsey sent the stock tanking with a dose of ‘real talk’ about how Twitter’s turnaround was going to require a lot of patience. That spooked investors, and it’s too soon to tell if the two sides will find some synergy in 2016.”
Unlocking the potential of Twitter
While the outlook is certainly gloomy and Dorsey has significant challenges ahead, it’s important not to overstate the case. Twitter is not going to fail any time soon. Its massive potential for earnings and growth is, like any free online social service, difficult to unlock.
As The Independent reported in May last year: “The holy grail of social media is, of course, advertising dollars and Twitter’s $500m acquisition of TellApart, an ecommerce advertising technology outfit, should improve Twitter’s ability to generate revenue.”
This, like Dorsey’s appointment, and product changes such as Moments and the proposed character limit, has not had the time to take full effect and can only be judged in the medium-term. However, the medium term is perhaps not as long as it used to be. Twitter must start showing improvements in 2016 or risk becoming the next MySpace.
For B2B marketers, Twitter’s problems are not necessarily cause for immediate action. While forward thinking marketers should certainly be keeping on top of developments in social and exploring use of the newest emerging problems, perhaps the larger lesson is more general: getting to the top is one thing, but staying there is more difficult. Under the scrutiny of being one of the biggest forces in your industry, planning and executing change is only the first step. To make it count, communicating that change clearly is also vital.