Twitter, the company that provides communication in 140-word Tweets, has seen phenomenal growth. It meshes well with our short attention spans, even while we desire to keep up with things as they happen. Nevertheless, it took a huge investment to get Twitter off the ground and to this point, with more than 100 million daily tweets and with integration of advertisers and other media. Therefore, its return on investment has been poor to date. Twitter is still at the stage of educating advertisers on the benefits of advertising on their platform and their best uses. Twitter calls an investment in its own company highly risky at this point.
There are other social media (Facebook, LinkedIn, Pinterest, Tumblr, to name a few), and there has been a faddishness to their use; people’s interest in certain brands tends to grow and then fade. Twitter has attempted to stay relevant by providing, for example, easy embedding of short videos on a user’s Twitter feed. However, technology has a way of developing in unexpected ways, and companies have a way of losing their ability to stay nimble as they age. Also, every new development requires new investment to keep up.
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Twitter has also needed to increase their investment in technology to keep up with demand. They have already had some failures of service during special events because so many people were trying to use the service at the same time; and they have had some hacks with private user information stolen. They are aware of these problems and invest substantially in trying to fix them, since if they continue, Twitter could end up with few users. It is the millions of tweets and growing that attract advertisers.
Twitter predicts that their growth will slow substantially, as they may have attracted nearly as many users as they are going to get. They have been the fad of the moment, so while Twitter invests substantially in attracting new users, growth is likely to slow, particularly as a percentage of current users (growth nearly tripled from 2010 to 2011; it is not likely to triple in one year again).
There are many assumptions that must be made about Twitter to try to predict its future growth. We think it will continue to do well because no other media keep things so short. However, there are a lot of variables. Twitter is aiming to improve these areas in 2015:
Improve the new user experience: Will technologically oriented staff be able to understand what keeps non-technological people away, and solve those issues?
More deeply integrate rich media: Will this work smoothly or slow things down?
Reduce barriers: Will users appreciate more opportunities to interact with Twitter or find it intrusive?
Deliver new apps and services: Everything has to work smoothly. Will they maintain quality control, or will quick work result in a shoddy product that will damage the brand?
Twitter also admits to many risks, which include: Failure to grow the user base, decline of user engagement, decline of quantity or quality of user contributions, loss of advertising, inability to compete for either users or advertisers, fluctuations that make results difficult to predict, requirement for effective interoperation with operating systems, devices, networks, web browsers, and standards that Twitter does not control; difficulties expanding globally, significant prior debt requiring sustained profitability or Twitter could find itself unable to service its debt; the future of the Internet, i.e. if some countries block access or net neutrality changes; misreading the appeal of new products; spam; failure of infrastructure to keep up with growth; negative publicity; support from partners; and complex and evolving national and international laws. Thus despite Twitter’s phenomenal popularity so far, the company has many issues to resolve on a constant and developing basis in order to succeed long term.
- Twitter, Inc. “Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.” United States Securities Exchange Commission Form 10-K. 2015. PDF File.
