Twitter has announced its intentions to go public, and in its wake a wave of negative press about Twitter’s problems has emerged. Given Facebook’s turbulent IPO and the wildly varying outcomes achieved from other recent social media and technology public offerings, I understand the skepticism.
In fact, I go so far as to agree that there are reasons to be concerned. There also are reasons for advertisers and investors to be bullish. Here’s a summary of the downside and the upside.
First, the headwinds:
- Though Twitter claims to have over 200 million active users, the monthly time spent, on average, with the service isn’t that impressive. In late November 2012, Mashable produced a graphic that shows visitors spent only 21 minutes per month on Twitter. That compares to over six hours per month on Facebook. For all the problems Facebook had during its IPO, it had over 800 million active users when it went publich, or over 4x Twitter’s audience.
- By comparison, on average NBC attracts nearly 10 million viewers every night for prime time. For the sake of argument, let’s assume those viewers watch at least one half hour program, and that approximately eight minutes of every 30-minute show are reserved for advertising. That amounts to 80 million ad minutes consumed per evening, or 2.4 billion ad minutes every month. At first glance, that looks favorable relative to the 4.2 billion minutes spent per month using Twitter, but NBC’s total includes just time spent with ads, whereas Twitter’s total encompasses everything consumed.
- Twitter posts include a lot of inane content. When I see other users tweeting about having arrived at an airport or going out for coffee, I’m more inclined to spend my social media time elsewhere.
- Some of that emptiness may be due to online bots, or programs, that create posts, many of them nonsensical. In addition, Twitter allows fictitious users to post tweets. Here’s one of my favorites. These artificial users have practically no value to advertisers.
It isn’t all bad news, though.
- Twitter has already cracked the mobile market. Seventy five percent of its users access the service via a mobile device, and 65 percent of its revenues come from mobile. It took Facebook months after its IPO to grow its mobile business into anything this size or significance.
- The reason likely has a lot to do with Twitter’s format. Rather than intrude upon a user’s experience with forgettable banner ads, Twitter offers sponsored posts within a user’s stream of tweets. The advertising format matches non-advertising tweets in its layout and presentation. Some may find that creepy, but it makes for less cluttered content.
- Twitter is partnering with television networks such as CBS to deliver video links in tweets. That not only allows networks to advertise their shows, but it gives them a potentially viral vehicle they can offer to advertisers to sponsor. I suspect we’ll see even more varied stuff in sponsored tweets in the coming months.
- Its platform has become an essential companion during television broadcasts. Twitter has seized on that development to offer an advertising program called Amplify, which enables networks to send relevant video content during its shows. ESPN uses it to share video highlights during its college football broadcasts, for example. Again, that serves two purposes: it ensures ESPN has a toehold on smartphones that users have with them during a television show, and it gives them space they can sell to advertisers.
So where do I stand? Though I understand why skeptics have called out Twitter’s challenges, I believe its assets position the company solidly for a future as a publicly-traded company. I’m particularly drawn to its strong mobile position and its ability to deliver advertising content in a way that users are more likely to accept than more traditional, digitally-derived alternatives such as banners. It is forging partnerships with traditional media that make sense for both parties. For better or worse, Twitter’s 140 character limit plays perfectly with an emerging demographic of consumers for whom brevity and mayfly-esque attention spans are the norm.
Lots of companies already use Twitter for things like customer service and community outreach. Adding advertising to the mix is a good idea, too.