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Is The Twitter Business Model In Trouble?

Twitter is an enigma. It is a social media company that doesn’t believe it belongs in the social networking genre and Twitter CEO, Dick Costolo insists that the company isn’t a “social network.”Is There Trouble @Twitter

Most outside observers of Twitter think it’s for “Twits” despite its propensity for attracting its fair share of high level media attention and celebrities and politicians. The issue for Twitter is that most people don’t “get it” and its secret marketing power is distracted by its perceived superficiality displayed by the public noise about Twitter.

It has 220 million users and it’s still struggling to monetise its brand and traffic. There have been three CEO’s exchanging chairs (and desks) since 2008, with Jack Dorsey removed in 2008 as its CEO to be replaced by the co- founder Evan Williams followed recently by Dick Costolo.

Twitter’s Challenges

When he took over as CEO in 2008, Williams faced huge challenges. The company had just 20 employees, almost entirely engineers, and during the first six months of his tenure, Twitter jumped from 5 million registered accounts to 71.3 million. The service was becoming more than just a venue for idle chatter, a fact driven home when, in 2009, the government put in a call to Williams to ask him to delay maintenance on the service so that Iranian voters could protest the election. A recent Fortune Magazine article on Twitter argues that

  • Twitters growth has levelled off during the last 12 months according to Comscore
  • U.S. users are spending less time on the site (down from an average of 14 minutes  per month to just over 12 minutes)
  • 47% of those who have Twitter accounts are no longer active
  • Twitter users are allowed to have multiple accounts
  • Slowing growth in the U.S. market is an important indicator of the company’s health — the U.S. is the biggest ad market and vital to Twitter’s moneymaking plans and Twitters US growth is static
  • It is only generating revenue of  $45 million (Facebook is generating $1.86 billon)
  • Twitter needs to get its act together or risk losing buzz, potential ad revenue, and its bright future too.
  • Less than 25% of users generate 90% of worldwide Tweets
  • The founders basically turned Twitter over to its users — initially a bunch of techie early adopters. The result was a bit of anarchy
  • Twitter needs to figure out what it wants to be when it grows up

The article also mentions that Google offered $2 billion for Twitter  and Facebook offered as much as $10 billion but apparently the board of Twitter voted unanimously to reject both offers.

Twitter’s “Blue Sky”

It appears that a lot of cash in the bank (Twitter has raised $360 million from heavyweights such as Jeff Bezos and Kleiner Perkins)  and the promise of a larger pay check in the future has created a boardroom that only sees blue sky (remember Microsoft once offered to pay $44.6 billion for Yahoo. Today Yahoo is valued at half that)

Biz Stone’s response to all this?

Twitter is an important company and it’s under scrutiny from journalists—this is exactly how it’s supposed to work

The reality is that Twitter is still getting press, when it stops getting attention you know it is indeed in trouble.

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Image by scipion50

Jeffbullas's Blog


  • By mentioning my dear old friend, Twitter’s name, you got me to read the article and that definitely speaks volumes =)

  • Alliwax

    I am definitely one of those people “who don’t get it”. Hoping to learn what there is to “get”!

    • Thanks for the comment Awax.
      This article could help in you understanding Twitter’s marketing power.
      The Twitter Marketing Secret That Most People Don’t Know http://ow.ly/4D3fl

  • I hope for our sakes’ that it doesn’t just go into the same old business model of selling ads.

  • While it’s easy to see the potential power a platform like Facebook has (which mainly resides in data), it’s hard to grasp a possible revenue model for Twitter. I’ve always wondered myself what the future is gonna hold for it, and I am less than relaxed about the outcomes.
    I hope it’s gonna hold and grow strong, especially with all the investments around it, but Myspace and Yahoo! clearly taught us nothing lasts forever.

  • Actually, while the growth has slowed, I think that much of that fast growth was SPAM related – people who thought they could make quick money based on the large population of users. Now that they realize they cannot, they are not as active – and I think that is a GOOD thing!

    Many of the people that ARE active on this platform use it for research, to share their expertise and to build their networks – making this, in my humble opinion, a very valuable tool!

  • Diane Meyer

    Your headline on this blog doesn’t help either. I would like you to have said, “Businesses who “get it” (Twitter) Understand the Model”. Negative verbage from varied power players has had an impact on the growth of Twitter and Business executives are confused. Successful business leaders such as myself and others have found Twitter to be an exceptional business tool in building a National business. I “get it” and myself and others “share it”. BUT we always seem to have to clarify or defend statistics that only partially tell the story or wasting time on explaining what the headlines of an article really means.

    Social Media is an integral part of businesses Marketing Mix and all platforms bring value. Yes….in time…some other technology will replace some of these but in the meantime, let’s stop the confusing “expert advice” for as you know, done correctly and with the expert advice needed, all companies can benefit from Twitter.

    Diane Meyer
    Marketing by DM

  • Wow, Jeff, I don’t think you get it either. US traffic to the website may have leveled, but that does not include the use of client apps. How many people do you know that use the website? Once you sign up and download an app, there’s no reason to go back.

    A minority of uses generate a majority of tweets should give you a clue of how Twitter is used. It is a user content consumption service, unlike FB, which is a user provided content site. It’s ONLY generating modest revenue because only recently launched monetization products. Grow the network first, monetize second. Define “active”. Again, most people use Twitter to receive information. You say US growth has slowed, but fail to mention that 70% of users are foreign?

    Bro, Twitter is over 1 billion tweets per WEEK! It is made for the mobile user, unlike FB. Twitter is fast becoming the mobile communication channel for the world. I honestly see Twitter eventually outgrowing Google and Facebook. New uses, upgrade cycle, and monetization options are vast. Of course, it’s all in the execution, isn’t it?

  • Jeff,

    I was waiting to read an article similar to this. Despite the severe reactions of some of your blog followers, I would have to agree with almost everything that you have brought to light. Although I am personally a pretty active Twitter user and actively advocate for it, especially as I pursue a career in public relations, I think your comparison of Twitter to Yahoo is spot on. In my opinion, for Twitter to have a real draw in the social media world, it needs to continue to update and expand its interface. From “liking” to advertising to check-ins, Facebook continuously creates innovation in the social media realm which is obvious by the incredible amount of active users and revenue. If Twitter can model Facebook in continuous advancements they may become top of mind in the next few years. If not, we might see the fall of Twitter.

    Michelle Isacson

    • Thanks Michelle for your comment. I am an ardent supporter of Twitter and it’s peculiarities and have used it to grow my blog traffic and spread my ideas and content and neglected other channels such as Facebook for marketing, but I agree that it needs to continue to innovate rapidly like Facebook and that means making lots of small mistakes constantly.The business model is its real challenge if it is to survive long term. In essence “make money”. Getting traffic first and then monetising second is a web mantra but it is 5 years since they kicked off. Maybe 2012 will be the year we will see its revenue rise significantly!

  • I read this article thanks to Twitter.

  • Jeff, One of the things I appreciate the most about your posts is that they contain real content, and real opinions. Part of my business is teaching self-marketing to non-marketers (essentail unless you plan to let others do 100% of the work when you are looking for a jo or more clients). Following your blog has been like a bit like going to “marketing university”, from home, and on my time. Thank you!

  • Susan

    I think it should re vamp the way we view our tweets! Twitter feeds remind me of an old DOS system! Don’t you agree? It needs to have more user friendly interface. Easy to navigate and to find users that we actually care to really follow. It needs to get away from the the orig built SMS streamline type news feed. Anyhow that’s just my two cents worth if it wants to monertise. Any trends locally or globally it should have advertisers that could be relevant to that topic for it to monetize. Anyway my business sense tells me stick to brick and morta with great infrastructure
    Close by. Such hospitals and universities if you want to make money.


  • It’s strange how nowhere in the Twitter Terms of Service or FAQ does the mention of 15000 over a 3-month period happen in order to get one’s profile verified.

    And if ,somehow, you pay the amount and then stop paying – they switch your account back to non-verified status…

    Would be great if you do some more research on this…

  • It’s strange how nowhere in the Twitter Terms of Service or FAQ does the mention of 15000 over a 3-month period happen in order to get one’s profile verified.

    And if ,somehow, you pay the amount and then stop paying – they switch your account back to non-verified status…

    Would be great if you do some more research on this…

  • Nicely written. It’s easy to be skeptical – I used to be – but when you really start using Twitter you see the value. But like many Internet startups, they need to find a revenue stream!

  • Graham Green

    Hey Jeff, a Fortune Magazine article from April 2011 in a blog post in 2013 is hardly “recent”. The data you cite is nearly two years old now, which makes it virtually irrelevant when it comes to what’s in store for Twitter now.