Twitter - Is The Bird About To Stop Tweeting?

Twitter, The Non-Profit Organisation!


Like an ageing pop princess, the chinks in Twitter's armour have started to appear. The brainchild of Jack Dorsey and Noah Glass, Twitter was launched in 2006. Between 2006 and 2013, when Twitter went public, the company had already incurred losses of over $418 million. Bare-bones, 90% of tech start-ups fail, the other 10% start life as a loss-making enterprise, but at some point, those loss-making enterprises need to turn a profit! After Twitter’s 2013 IPO, things got no better. In 2014, Twitter pulled in revenues of $1.4 billion, but reported pre-tax losses of $578 million. In 2015, Twitter reported pre-tax losses of $90 million. Twitter’s annus-horribilis was surely 2016, with reported losses of an eye watering $167 million.

 So, where has it all gone wrong? User growth! Twitter’s user growth, like the Three Toed Sloth, has been glacial at best. In its infancy Twitter rapidly gained an army of followers, but between 2015 and February 2017, Facebook, Instagram; WhatsApp, and even Snapchat’s user growth left Twitter’s in the dust.


Twitter users have decreased dramatically.

Twitter users have decreased dramatically.


 Those that say nothing is certain but death and taxes are mistaken. You can be certain in business, that where the eyeballs go, advertisers will follow. In July 2017, Facebook had gained 70 million new users, Twitter on the other hand lost millions of domestic users. Twitter’s domestic losses were somewhat offset by international growth, but investors aren’t thrilled by stagnation. Facebook and Instagram continue to hoover up digital advertising revenue, meanwhile Twitter’s inability to broaden its user base has meant a drop in digital advertising revenues.


  While Twitter’s advert engagement did increase in 2017, its advertising sales fell by 8%. In 2017, Victor Anthony, an internet analyst at Aegis Capital said, "You have zero user growth versus Facebook reporting 70 million new users. It's not a recipe for a stock you want to buy". Those in the know at Barron’s, a US publication owned by News Corp, dedicated to market development and blue-chip financials said, “Until we see evidence that Twitter management has adopted a strategy that will drive user and engagement growth, we advise investors to remain on the side-lines”.

 The revolving door at Twitter, did it’s share prices no favours. Twitter is notorious for losing, hiring, firing, and rehiring senior staff. Jack Dorsey was forced out of his position as CEO in 2008. The rumour mill said his firing was down to his love of Yoga and fashion, plausible. I like to think it was the fact that while he was in charge, there was no backup of Twitter’s database. Twitter rehired Dorsey in 2015, and three months later, Alex Roetter, Head of Engineering, and Kevin Weil; Product Head, left the building. Katie Jacobs Stanton, Head of Media, alongside the Vice President of Human Resources, Skip Schipper, also jumped ship; Twitter’s share price plummeted accordingly, falling below $16 for the first time.


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Innovation is another area in which Twitter does not match up to Instagram, Facebook, and Snapchat. The bright sparks at Snapchat and Instagram, are forever creating and adding new features or capabilities that their youthful users, like totally, like for real, like OMG, flip out about. When the youth flip out, you can say hello to branded content and some serious profits. Twitter gave us ‘Moments’, which wouldn’t incorporate anything from a user’s Followers or Lists, even better, you couldn’t personalise or customise it in any way, what fun. The user response to Twitter’s Moments, was anything but explosive.


 Twitter may go the way of Yahoo, or Myspace. Zuckerberg and his team are adept when it comes to product focus, and appear committed to their core users long term experience of their platforms. Twitter, and its Yoga loving CEO Jack Dorsey, at this point can’t say the same, which is why Twitter can’t yet call itself a mainstream platform. Ben Thomas, a tech and media analyst said, “Twitter has failed to develop a huge self-serve platform in the way Facebook has. It’s simply not clear that Twitter is as effective in its direct marketing efforts as its rivals, and its revenues have suffered accordingly”.

 It remains to be seen whether Twitter will still be with us in 5 years, I’m hopeful, as since its inception in 2006, Twitter recently reported its first ever profitable quarter. Still, there’s a hard road ahead, if Twitter ever hopes to match The Fleecebook, The Instagram, or The SnapNumpty.

Words by George Carter

BusinessTim Byrne