Twitter suffering from growing pains

Will the social media platform ever rival Facebook?

Twitter's honeymoon as a publicly traded company could be coming to an end. With growth stalling and timeline views on the decline for the first time ever, Twitter finds itself at a crossroads.

While its quest for more ad revenue continues unabated, the company faces even greater pressure to attract new users and dramatically increase engagement on the platform.

"Twitter has seen its sequential MAU growth rate decelerate sharply after hitting 50 million, raising concerns that its quirkier nature might cap its potential audience in the US at a ceiling well below that of Facebook," said Seth Shafer from SNL Kagan.

"We as a company aren't going to be satisfied - I am not going to be satisfied - until we reach every connected person on the planet, period," CEO Dick Costolo said at last week's Goldman Sachs Technology and Internet Conference.

The challenge ahead for Twitter coupled with Costolo's grandiose goal puts the company in a predicament unlike any it has confronted before. It also fans the unfortunate, yet inevitable comparison to Facebook.

While Twitter ended 2013 with an average monthly active user (MAU) base of 241 million, Facebook surpassed 1.23 billion. For every user that engages on Twitter, at least five are actively using Facebook.

"Twitter needs to do something to grow to the size of Facebook but the jury is still out if there's a clear path for Twitter or any other company to do that, or if Facebook is a once-in-a-lifetime anomaly that was in the right place at the right time," said Seth Shafer, associate analyst at SNL Kagan.

Costolo hasn't helped matters by failing to meet previous internal estimates for growth either. Early last year the executive reportedly told employees that he expected to reach 400 million MAUs by the end of 2013. Failing to double its active user base last year, Twitter reported a 30 per cent increase in its stead.

"Twitter's overall MAU growth is still pretty healthy, but it's all coming internationally where users monetise at a much lower rate. US growth has slowed significantly at about 50 million MAUs," said Shafer.

Facebook blew past 50 million US MAUs without blinking and moreover, its sequential increases didn't dip into the single digits until it surpassed about 120 million users in the US, according to SNL Kagan data.

"Twitter, however, has seen its own sequential MAU growth rate decelerate sharply after hitting 50 million MAUs, raising concerns that its quirkier nature and niche focus might cap its potential audience in the United States at a ceiling well below that of Facebook," Shafer adds.

Twitter's 'road map' for growth

Nonetheless, Twitter's lead executive says he is optimistic about rising user growth. While the company is being careful not to make specific promises or announcements about how it will improve on these points, Costolo has frequently referenced a road map of late that lays out a strategy for achieving better growth over the course of the year.

Pointing to field research and internal data on how users engage with the platform, he hints at a series of new features and design changes that are expected to drive new user growth.

Twitter's vault of data and newfound capability to experiment with multiple beta tests simultaneously has "informed a very specific road map for the kinds of capabilities we want to introduce to the product that we believe will drive user growth," said Costolo.

He is quick to point out, however, that no single product feature or change to the platform will lead to a "quantum leap change in growth." Instead it will be an accumulation of numerous tweaks throughout the year that give him confidence. "You're going to be seeing a significant amount of experimentation of different ideas we have," he said.

While dispelling concerns about lagging growth in the recently closed quarter, Costolo said there was no specific event or trend during the quarter that meaningfully impacts how the company thinks about user growth.

Indeed, improvements made during the finals months of 2013, particularly in messaging and discovery, have already paid off. Favorites and retweets rose 35 percent from the previous quarter and direct messages jumped 25 percent over the same period, according to Twitter.

"I'm starting to see those interactions do what we hoped they would do," he said. "It's more about pushing the content forward and pushing back the scaffolding of Twitter."

The company also hopes to attract new users by simplifying its on-boarding process and dramatically reducing the 11 steps a new account currently requires.

Under the shadow of Facebook

Twitter has successfully maneuvered through its fair share of challenges before. Be it the fail whale sightings and power struggles of its early days or the feverish hunt for ad revenue of late, the company has found its way.

But now with its first complete quarter as a public company in the rear view, the demands for growth from investors will only get louder with each passing quarter.

Twitter will have to deliver some big numbers in 2014 to keep Wall Street happy, but Costolo's comments also suggest that much of that success will depend on a clear differentiation between Twitter's role in the world and that of Facebook.

"Twitter is this indispensable companion to life in the moment," Costolo said. "If you think about it as a product, I think that misses the impact and the reach of what we really believe is a content, communications and data platform."

By that distinction, the opportunities afforded to Twitter are "enormous," said Costolo. "We believe we are the only platform where you get an understanding of wide reach in the moment while it's happening."

Tapping into big data and personalisation could help, but it won't move the needle far enough for Twitter to reach the scale of Facebook, said Shafer.

Emerging from under the shadow of Facebook will be a struggle for Twitter unless it makes dramatic changes to the service or goes on an acquisition binge aimed at cobbling something larger together, he adds. And even that would be a challenge because of course, "we already have a pretty big thing like that called Facebook," Shafer said.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Blog Posts

Will our manners go the same way as texting when robotic servants take over?

Much of the talk in the industry is focused on the limited amount of time that screens have left in our lives.

Katja Forbes

Founder and chief, sfyte

Social purpose: Oxygen for your brand health vitals

If trust is the new currency, then we’re in deep trouble. Here's why.

Carolyn Butler-Madden

Founder and CEO, Sunday Lunch

Customer experience disruption: Healthcare faces a bitter pill

Over the past decade, disruptors such as Amazon, Apple and Australia’s Atlassian have delivered technology enhanced customer experiences, which for the most part, have improved customers’ lives and delivered unparalleled growth. Can they do the same for healthcare?

Alex Allwood

Principal, All Work Together

The advancement of AI will make most of human jobs obsolete in the coming 10 to 20 years. Protecting or try to save jobs will make the h...

vallab01

Aussie futurist: Personal AI will be a reality in five years

Read more

are you talking about bbc news here

frank

CMO interview: How BBC Worldwide's marketing lead builds brand purpose and growth

Read more

Toms is definitely my favourite shoe brand! Along with Aurélien. For this summer I bought two pairs of navy Toms espadrilles and a pair o...

Paul Erickson

​The shoe with a good soul: TOMS’ innovations for philanthropic engagement

Read more

I think this is the best article today about the salesforce latest platform. Thanks for taking your own time to discuss this topic, I fee...

Ramramky

Salesforce looks to democratise AI, IoT with latest platform play

Read more

I came across this recently when researching blockchain loyalty point projects. There are quite a few projects. Most are in development a...

Andrew @ EcomLoop

How cryptocurrency is set to change the customer loyalty program model

Read more

Latest Podcast

More podcasts

Sign in