Today it’s been announced that we could all soon own a little piece of Twitter. The micro blogging service has announced that they have applied to become a public company and so will be floated on the stock market.
In doing this Twitter is following in the footsteps of Facebook whose stock was initially sold at what appears to be an over-inflated price as only now after 16 months has their share price risen back towards its opening price. Facebook’s example highlights how risky short term investments in Twitter might be.
But most discussion over Twitter’s news centres around what this could mean for a company that in the past has struggled to generate meaningful revenue. However at an estimated $583 million in 2013 it seems selling tweets (both as advertisements and as data) is improving the situation at Twitter HQ. But will Twitter push harder to earn even more money?
It’s clear no company can remain static; they have to continue to chase even more revenue, especially when there are shareholders to keep happy. But with the information we submit to Twitter being their most valuable asset is Twitter on course to alienate a large part of its user base, and if it does is there room for a competitor to arise?
The most similar competitor Mensch came and went. App.net is a paid for service that indeed solves many of the issues people have with Twitter, but is never likely to attract the average user. So with a lack of like for like competitor could a company like Bronco enter the micro blogging market?
Not really, and nor could anyone else. What people dislike about Twitter are the things that generate them revenue. No other company could run a Twitter clone, make it successful and make no money in the process. The subscription model of App.net is the only clear viable alternative.
To run a free Twitter clone without selling something means spending a lot of someone else’s money on people, infrastructure and marketing. But if that money comes from Venture Capitalist they’ll want to see a return one day and if it comes from your own pockets you’ll never see that money again unless you sell up and sell out.
You might think you can do all this on a small budget and by word of mouth but things are too competitive now for that to happen. Consider the price comparison or pay day loan markets. If you don’t have money to invest in TV advertising then your potential for success is greatly restricted.
The same is true for social networks; you have to be able to attract enough people in those early days so that people stick around and the service grows.
A few years ago we were contracted to design and build a new social network that aimed to fill the niche between traditional social networks and online dating with gamification built in; a mix of Facebook and OK Cupid. Unfortunately the website never reached its full potential as the marketing strategy was just too under-developed and the expectations too high.
Though Facebook likely had no clear strategy in those early days the fact they focused on a single University at launch and then grew to other Universities before pushing it out to the general populous is one of the reasons they’re here today. It gave them a way to scale up slowly and also focus on attracting people from a very particular niche so when they did expand they had a good number of users.
And this is where we are today with any new social networks having to target a particular niche, either in the functionality they offer or in the audience they attract. It’s a common joke in agencies of clients requesting a clone of Facebook with a budget of a few thousand pounds. Not only is cloning Facebook going to cost much, much more but any money spent doing so is simply wasted.
To succeed you can’t just build the next Facebook or Twitter, you have to innovate and create something new, something better that will give people a reason to start using your service and bring their friends along too. Not only that but you have to gain enough momentum before Facebook takes notice and copies that special thing that makes you unique.
All we can hope for is that while the users of Twitter have become a commodity to be sold that they remember that we as a group remain the most important part of their business. If something does happen that has people leaving Twitter then the company won’t be floating anymore; it’ll be sinking.
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