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Twitter Case Study Analysis

Twitter, a micro-blogging company, is facing a challenge of increased annual net loss and a

stagnant growth in user sign-up. On the other hand, Facebook "muscles in", dominating 57% of

social media advertising budgets while Twitter just 13%. The company, hence, is facing the

pressuring of increasing the stock value by either developing more advertising products or

diversifying its revenue stream into other areas.

A series of mediocre product changes at Twitter, indicated in the case study, section " Twitter

Evolves", for example, the confusing “Moments” feature, have been the long-term challenge for

the company. Twitter lacks a roadmap for product development that should have been driven by

their mission statement.

As stated in the case study, Fred Wilson, a member of Board of Directors, states that Twitter

platform has been mostly "filling the holes" as it goes. First, developers started to redesign

Twitter to be mobile-adaptive, in other words, responsive across different sizes of tablets. Twitter

then slowly added other applications such as photo-sharing, URL shorteners, search engine

optimization (SEO), etc. Product development, especially for blogging and social sharing

platform such as Facebook, Twitter or Google Plus, is essential to enhance user experience.

However, in the case of Twitter in the year of 2011-2012, a spontaneous marginal customization

of the look on the homepage would confuse users. Such out-of-the-blue changes in the product

make it hard to follow conversations and narratives.

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Exhibit 15, the visual graph showing the number of unique visitors to www.twitter.com, has

shown significant drop of loyal audience between December 2012 and Mach 13. The growth,

consequently, was stagnant with a noticeable rise within Sep 2013 and December 2013, from just

35 thousand to approximately 40 thousand unique visitors. Unique visitors, by definition, refer to

the distinct multiple visits to the same web page or application during a specific duration of time.

Referring back to the case study, in the section "Core Product Evolves", 2012 and 2013 are the

years that Twitter started to introduce a more visual-focused timeline. Twitter also introduced

"expanded tweets" feature with the target users to be news corporation and SoundCloud.

Looking solely at unique visitors’ graph will make unsound analysis if we do not look into

Exhibit 1, Twitter Stock Chart from Thomson One, accessed in Jan 14. Twitter published its IPO

on Nov 7, 2013 with the first trade coming in at $45 dollars a share, dropped back to around $44

per share and had been around $40 to $45 dollars per share until slowly climbing back up the

chart nearly the end of 2013, corresponding to the growth in visitors mentioned above at the end

of 2013. Exhibit 2 shows the three consecutive net loss from 2010 to 2012, with an increase in

revenue of around 36% from 2011 to 2012. A significant investment in R& D is shown from

2011 to 2012, from 80 million to 119 million. Such 119 million, though, might not justify the

changes that Twitter is making to increase the user database. As stated at the second paragraph,

without planning, new features on Twitter would mostly act as "filling in the hole".

Again, I want to go back to my point that fragmented new features that are mostly introduced

and deactivated on trial-and-error, instead of enhancing the vision statement of Twitter can result

in stagnant growth as explained in previous paragraphs, not mentioning a long-term drop in

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stocks for the years to come. The mission statement of Twitter, accessed on

https://about.twitter.com/company, highlights the "instant" information delivery. Yet, from the

features introduced to users, including the promoted tweets for brands, rewards quantity instead

of the quality of the information. The competitive advantage of Twitter, also considered as its

weak point, is the "instantaneous” characteristic of the tweet. It means that the average lifespan

of a Tweet is about an hour. Consequently, a tweet might contain the most useful information but

will not be seen or clicked on if not pushed in the right time, compared to one that is considered

"mediocre" and "trivial" but are pushed constantly.

Straying away from a company’s vision statement can be entrepreneurial and acceptable for

some startup-like business, but for Twitter, the monetization engine not focusing on the nature of

the platform can result in the company’s negative cash flow as indicated.

I want to look at the Facebook case, also mentioned in the case study, section " Facebook

Muscles in". Though Facebook's profile change drew huge attention in March 2009, it is

Facebook private policy and security to protect users that have demonstrated its mastery of

product focus and long-term commitment to user experience. While Facebook just allows users

to register their real names, which makes the platform a safer place for conversation, Twitter

focuses on Mention feature as identification verification, which in returns, can create a lot of

noises in the data.

While the consolidated financials in Exhibit 2 in the case study or the growth chart in Exhibit 1

show the challenge of Twitter for shareholders, it is the “irrelevancy” of the information that is
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the fundamental problem for Twitter, which indicated in the series of screenshots from Exhibit

20-24. Those screenshots show that Twitter is trying all its best to modify and enhance its

services on a marginal level, instead of focusing on the core value of the business as a social

media platform. Twitter, as defined originally in the introduction section of the case study, owns

a huge database of real-time feed. Twitter's attempt to populate the platform with a quantity of

trivial tweets from brands through paid account, will soon be outpaced by Facebook, Snapchat

and Instagram.

The greatest potentiality for monetization is the data licensing of Twitter. Unfortunately, as the

most valuable asset that Twitter is the number of data from its users and the variables that define

each data point, Twitter does not seem to exploit its asset in this case study, as just 13% revenue

stream came from licensing data for brands to deliver insights. A promise of digital marketing is

more precise targeting and data collection. Twitter lags behind Facebook in both. Though

Twitter lets advertisers reach users based on their interests by looking at the followed accounts

(Exhibit 16 and 17), it is necessary to take the next step on deeply mining into the detailed

demographic data such as what Facebook collects, including university affiliation, birth year and

the like.

The above analysis indicates that unless Twitter can find a way to streamline all the features and

products, the service will remain confused and undifferentiated in the market.

The case study did not elaborate much on the detailed audience demographic using Twitter such

as age range or annual income, etc. but the gender difference. However, it is recommended for
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increase investment on research and development (R&D) Twitter users to develop a product, or

line of products that cater to different categories of audience.

Twitter, through the core product evolution to its effort to raise more money by introducing

advertising services, all are going against the nature of the platform that values small snippets of

information. Instead of horizontal development, which means more products, it is necessary to

think of a vertical approach, with featured services that promise to deliver better-quality

information. In other words, Twitter should consider increasing spending on data-mining and

insight delivering for bigger accounts instead of putting more than 75% on enhanced advertising,

as Twitter has been doing indicated in the case study. Consequently, Twitter can position itself as

a data-focused company. With its massive database of users, it might be time for Twitter to

realize its most lucrative revenue stream, the data licensing business model.

The graph below shows a vertical approach to monetize for Twitter against creating more

featured and promoted accounts for advertisers. The fact is Twitter is being compared with
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In conclusion, Twitter net loss in the case study has indicated the pressure of monetizing when a

social media company publishes its IPO. The declining stock price from Twitter is not unusual

for a lot of startups. However, not using the vision statement as a drive for any product change,

in this case study, is a threatening sign for company survival. This case study analysis has

suggested that Twitter delivers more focused and targeted information to not only users, but to

brand agencies and government entities.