Twitter In A Corner – Facing Huge Challenges

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It’s easy to consider Twitter a success, particularly if you don’t look at it as a business, but it’s facing some critical issues and Catch-22’s that may endanger its existence over the next 12 months. The fact that it has not turned a profit yet, and the business need to start providing return on investment for its investors, puts it in an awkward position. It’s a position that other platforms will also face or are now facing.

The Commercialization Corner

Any business has to generate a) revenue, and b) profit. At least any business that isn’t owned by Google. There are only a limited number of ways one can do these things, and they all involve commercializing the product or service you have. Twitter is moving to create revenue through the sale of advertising and seems to recognize that there is risk involved in doing so, thus it’s easing into it.

The problem they face, though is not the common one of finding advertisers, at least not in this temporary era of social media hype and hope. It’s this:

With 80% of user accounts abandoned, can Twitter afford to move away from it’s social community roots in order to monetize its operation?

Can it hit the critical balancing point where it can maintain its user base, attract more users while using user eyeballs to generate money? It’s unlikely. There is a point where the commercial use will drive social and community users out of the space, or to competitors, and that reality, or at least possibility limits the revenue potential.

At the same time, there is the issue of commercialization from third party sources who aren’t paying anything for the free advertising they get from simply dumping tweets into the stream. They damage the user experience for those who are not there to buy things, the majority of users, and they don’t drive any revenue at all for Twitter.

This is probably the critical issue for Twitter right now: To find a way of generating revenue that will not alienate future and present users, who after all, provide Twitter with a reason to exist.

Coupled with the limited features Twitter has to offer, and it’s certainly at risk. Our prediction is it will be acquired, be absorbed or change completely in the next two years.

Finally, one interesting point. It may turn out that Twitter actually leaves the social media arena and becomes a search engine of sorts, something that has been hinted at in the past. We’ll see. Perhaps that’s what the recent annoucement about building its own data center means.

Republished with author's permission from original post.

Robert Bacal
Robert began his career as an educator and trainer at the age of twenty (which is over 30 years ago!), as a teaching assistant at Concordia University. Since then he as trained teachers for the college and high school level, taught at several universities and trained thousands of employees and managers in customer service, conflict management and performance appraisal and performance management skills.

2 COMMENTS

  1. Well taken! For example, in the area of marketing hash tags, if somebody would take the time to analyze the volume of tweets by vendors (like me) + consultants vs. actual practitioners, a very clear picture would emerge.

    Partially vendors+consultants are indeed using this as free advertising. But in my particular area (#measure) I have to say that almost everyone is doing well, i.e. pushing educational / informational content and not spam.

    You could also argue that the hash tag would be pretty sparse in content if the vendors + consultants didn’t keep it alive and going.

    Something else worries me about Twitter though: the volume of the chatter even on a hash tag can be so high that it is like a fire hose of info. In a time of information overload I only turn to reading Twitter when there is a live event that I need to catch up on in real time.
    Akin

  2. One thing to keep in mind is that Twitter is not designed to be content/topic driven. Hashtags were an user innovation because Twitter didn’t work well for what those users wanted.

    Twitter is to FOLLOW people, not topics, and that, in a busy world, leave it as a chat toy, and spam magnet. Hashtags are very inefficient if you are interested in a hashtagged topic.

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