What the Hell is Going On with Twitter?
There is a certain fascination with Twitter’s downward spiral. The company has come a long way in its eleven years. From a popular social platform that paved the way for interactive activism to a company whose own ad algorithm is killing their revenue, watching Twitter’s current state of affairs is as painful as watching a car crash. Yet, you can’t tear your eyes away from the carnage. With Jason Calacanis, a well known angel investor, calling Twitter “the worst stock to own in tech” and the emergence that 15% of their “users” are actually bots, Twitter’s public image looks grim. But what if there is more to this story than what we’re told? What is happening with Twitter and why is it important?
Though it has only been about four months into 2017, it’s been a rough year for Twitter Inc. Shares in the company are down more than 5% so far in 2017. Worse yet, the value of the shares are 40% lower than their IPO on November 6th, 2013. But, in the last month and a half, the company has made several very strategic PR moves. These announcements serve as a tool to shift the public’s perception of the social network. 2017 is a do or die year for Twitter. The steps that they’re making towards bettering their brand are being met with equal enthusiasm by bad publicity. Twitter Inc does have something in their current state that a lot of companies that have failed did not have. They still believe in their product, as well as the people their product serves.
A primary catalyst for Twitter’s current state of affairs is their failing revenue. Their earnings have been tumbling due to two primary factors: competition and cost. Twitter’s number of new users is not at the same level as other social networks like Instagram and Snapchat. But even if they were at the same level, the price points for Twitter’s ads are not as attractive. The value and price of the ads have also become too expensive to attract most advertisers.
Twitter targets advertiser’s wallets through a system of engagement. For instance, if the company’s aim is to increase web traffic to their site, they are charged by the number of clicks from Twitter to the ad. When it comes to video ads, however, Twitter is still ahead of the game in the industry. After the company integrated Periscope (a live video streaming app) and they shifted their algorithmic-based timeline to fit pertaining videos to users feeds, their video platform was able to grow. Like television advertisers, Twitter has partnered with companies like Bloomberg and the NFL to gain viewership and revenue. Although Twitter is ahead of others with video ads, other big social networks are catching up quickly.
The problem with Twitter’s tv-like system lies with those who are rejecting television itself: millennials. Companies like Snap and Facebook are attempting to capitalize on the death of television by integrating their video ads onto what millennials are paying attention to. For instance, Snapchat integrates ads into the stories of users, publishers, and live streams. This better integrates the advertisements into the users’ social media habits. By sticking to video ads in news items, Twitter is hindering their long-term advertisement potential.
As a recent retaliation to combat this issue, Twitter has announced a possible cure to its ills: a paid subscription service for its users. Looking to LinkedIn for inspiration, Twitter is attempting to target journalist and marketing professionals for this $19.99 a month service. Using Twitter’s desktop platform, called TweetDeck, the subscription offers a full array of features, guaranteeing access to “what is happening in the world, [and to] see the broadest range of what people are saying on Twitter.” If this idea does pan out, the company would be able to reinforce their revenue by providing a service that eliminates their need for ads, thereby eliminating most of their problems. However, despite this bold and well-publicized announcement, the company itself does admit that as of right now, the subscription is currently standing as an idea. Whether the service becomes an implemented source of revenue for Twitter remains to be seen, as the company continues to conduct research.
Although Twitter has been struggling with their free platform, a subscription service could reinvent their product as an invaluable tool for professionals. If done well, in depth access to statistics and trends from around the world would serve as a marketing professional’s wet dream. Dependent upon the possibility that Twitter can sell a small percentage of their monthly users on this service, it could turn the tables for their revenue and stock value.
On Valentine’s Day 2017, Twitter CEO Jack Dorsey proclaimed his love for the company he co-created with a link. This link led to a securities and exchange commission form stating that he had bought an extra 426,000 shares in the company valued at roughly $7 million. It is puzzling to hear this announcement for several reasons. For one, why would somebody buy more stock in a company that is plagued by poor profits? As CEO, Jack Dorsey already has the most outstanding stock of all of the shareholders. Why buy more? Startup founders tend to be passionate by nature. Is this public statement an indicator that Twitter is just a sinking ship with a founder who sinks more of his money in the hopes of maintaining his creation?
Following Jack Dorsey’s purchase of Twitter stock, his reasons for the move became more clear in the days that followed. The purchases helped bring Twitter’s stock up to a high of 5% that same day, keeping a steady momentum through the next day. $7 million is a huge step, even for the CEO of a major social network. Regardless of any motives for doing so, it is evident from this move that Jack Dorsey has true faith in the value that his company brings to consumers.
It is difficult to say where Twitter is headed. On paper, there are many things flawed with the company and its leadership. In this sense, the company is failing. However, its current importance in media is undeniable. As the preferred social media megaphone of the president of the United States, Twitter itself has proven to be the largest source of breaking news. This is particularly evident in the 2016 election, in which over 40 million related tweets were sent by 10 pm Eastern time on that day.
What Twitter does need to focus on is their potential. If they are able to provide a viable, refreshing product to their consumers and reinvent themselves as a company, Twitter could be an underdog ready to scale new heights.