Company Brief

Twitter
by Michael Gariffo

Copyright 2010, Faulkner Information Services. All Rights Reserved.

Docid: 00021910

Publication Date: 1010

Report Type: VENDOR

Report Contents:

● Description
● Key Executives
● Competitors
● Financials

Fast Facts
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Name: Twitter
Headquarters
539 Bryant St., Suite 402
San Francisco, CA 94107
Phone: (650) 543-4800
Fax: (650) 543-4801
Web: http://www.twitter.com/
Type of Vendor: Social Networking Site
Founded: 2006
Service Areas: Global
Stock Symbol: Twitter is privately-held.
Employees: 300

Description
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Twitter is a leading, fast-growing social network and micro-blogging Web site. Twitter allows individuals and
organizations to send brief messages, or "tweets", to other Twitter users worldwide. A form of the micro-blog entry,
tweets are text-based posts of 140 characters or less. Twitter members can choose to follow the tweets of any
number of people, whose messages are sent to their followers via timelines on Twitter.com or through a multitude
of desktop, and mobile applications. It is increasingly being used by enterprises as a marketing platform for
reaching clients.

Emerging as a start-up in San Francisco, California, Twitter has grown into a global short-messaging service that
works over multiple networks and devices. Twitter was funded initially by Obvious, a creative incubator in San
Francisco. The first prototype was built in March 2006 and launched publicly that August. In May 2007, Twitter
Incorporated was born.

Figure 1 illustrates a Twitter member's home page, including tweets from users the member is following.

Figure 1. Twitter Home Page

Source: Twitter

Businesses and famous personalities quickly saw the value of Twitter's ability to spread information between
groups, customers, and individuals. As a result, at first Twitter's age demographic skewed higher than on rival
social networks such as MySpace and Facebook. This age gap lessened as the service's popularity grew. By
December 2009 comScore reported that all demographics segments below 54 years of age held a relatively equal
portion of about 12-15%, with the 55-65, and 65+ age groups accounting for approximately 4% and 2%
respectively.1 Twitter's average user age currently rests at 39, while Facebook's has continually risen to come very
close at 38.5, up from 26 in May 2008, Royal Pingdom found.2 Another criticism of Twitter is that about 60 percent
of accounts become idle within one month, according to two Nielson studies of Twitter.com3 and Twitter-related
applications.4

Figure 2 charts the age demographics of unique Twitter users in the US from December 2008 to December 2009.

Figure 2. US Unique Visitor Trend

Source: comScore Media Metrix

To attract and retain users, Twitter continues to seek ways to improve its relevance and user experience. Toward
this goal Twitter has released its own branded applications for numerous mobile platforms, and has also
announced pre-installed support for the upcoming Google TV. The company continues to form partnerships Around
the Web, and has created the "Tweet" button, as well as methods of embedding timelines into third-party Web
pages. On top of all this, Twitter also offers an extremely popular application programming interface (API) for
designing third-party Twitter applications and widgets. Figure 3 depicts a widget for displaying a Twitter feed on an
individual's social network profile.

Figure 3. Twitter Profile Widget

Source: Twitter

As Twitter evolves, so do its uses. Twitter is now known as a valuable communication tool during current events -
illustrated in summer 2009 by thousands of tweets from demonstrators and eye-witnesses in Iran during intense
election protests.5 Celebrities have brought Twitter name recognition - with users like Ashton Kutcher gaining one
million followers during a race with CNN for the most followers, with the winner donating 10,000 mosquito nets to
World Malaria Day.6 Twitter is also now publicly searchable. In October 2009, Twitter made deals with Google and
Microsoft to index tweets for Google and Microsoft's Bing search engines.7,8 Yahoo later gained access to the
entirety of Twitter's information stream as well. As the Twitter phenomenon has unfolded, the site has become a
forum for public relations, consumer complaints, marketing, news gathering, emergency response, and a number of
other purposes - including the spread of "pointless babble" (40.55 percent of all tweets, according to a study from
Pear Analytics in August 2009).10

Until very recently Twitter maintained that its business model was in a "research phase." During this time the
company openly admitted to "spend[ing] more than we make." However, since then, Twitter has finally launched
several monetization efforts. The earliest were the company's Promoted Tweets program, and its @earlybird
specials, while the Promoted Promotions initiative has only recently been announced.

Promoted Tweets allows a company to pay Twitter to have a particular Tweet show up at the top of the timeline of
users following that company, and near the top of the timeline on the main page of the site. This service lets
advertisers place high visibility tweets on the screens of users who have already shown some interest in their
products. Although no specific numbers have been released on the success of Promoted Tweets have been
released, the continuation of the program, and the impending launch of Promoted Promotions, would suggest that
the endeavor has been profitable.
The @earlybird specials were not as great a success for Twitter. The @earlybird account was opened to tweet
short term steep discounts and other limited time special offers. However, due to the infrequency of offers, and the
general lack of interest in most of the promotions posted, Twitter announced that it would be ending the @earlybird
program in September 2010.11

The Promoted Promotions effort, which has only just been announced, will function similarly to the existing
Promoted Tweets offering. Companies will be able to pay Twitter to have their corporate @page featured at the top
of a user's suggestions of who to follow. This will not place the company's profile on the suggestion pages of users
the site's algorithms believe would have no interest in that company. However, it will assure high visibility of the
company's presence to users that the automated systems believe would fall into that company's target audience.

Although Twitter is a rising star in the social networking world, its market share numbers can often be deceiving.
Accounting for less than 1% of the total US social networking market, the site would appear insignificant next to a
juggernaut life Facebook. However, this is far from true. First, the market share numbers, usually based on visitors
to the site, are skewed due to the large portion of Twitter users that never actually log on to Twitter.com, but rather
access the site from desktop and mobile applications. Second, Twitter's presence is now spread around the Web in
a fashion similar to Facebook's. It has become commonplace for a Web browser to expect an author's Twitter
stream to appear alongside his blog posts, or for a sports fan to expect his team's timeline to show up on their
official page. Twitter's influence reaches far beyond what the market share of its Web site can account for. Finally,
Social networking as a whole has seen massive growth over the past year, with multitudes of new users, and new
sites being added to the rankings and lowering the market shares of almost all existing competitors.

Table 1. US Social Networking Leaders - 2010

Social Network 2010 US Market Share12 2009 US Market Share13

Facebook 1. 60.67% 1. 43.84%

YouTube 2. 18.15% 3. 14.04%

MySpace 3. 6.00% 2. 20.53%

Twitter 4. .98% 6. 1.09%

Tagged 5. .97% 4. 1.68%

Yahoo Answers 6. .97% 5. 1.18%

Key Executives
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CEO: Dick Costolo

Co-Founder/ Product Strategist: Evan Williams

Chairman of the Board: Jack Dorsey

Co-Founder/Creative Director: Biz Stone

Competitors
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Facebook: http://www.facebook.com/
LinkedIn: http://www.linkedin.com/
MySpace: http://www.myspace.com/
MyYearbook: http://www.myyearbook.com/
Tagged: http://www.tagged.com/
YouTube: http://www.youtube.com/

Financials
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Twitter is privately-held and does not release financial information. It is financed by venture capitalists, and by its
own advertising programs. In terms of a business model, the company is still in its infancy.

References

1 "Facebook, Twitter Grow More than 100%" Marketing Charts. February 21, 2010.

2 "Study: Ages of Social Network Users." Royal Pingdom. February 16, 2010.

3 David Martin. "Twitter Quitters Post Roadblock to Long-Term Growth." Nielson Wire. April 28, 2009.

4 David Martin. "Update: Return of the Twitter Quitters." Nielson Wire. April 30, 2009.

5 Lev Grossman. "Iran Protests: Twitter, the Medium of the Movement." Time. June 17, 2009.

6 Barclay Palmer. "Ashton Kutcher Beats Malaria." Anderson Cooper 360: Blogs from CNN. April 17, 2009.

7 Marissa Mayer. "RT @google: Tweets and updates and search, oh my!" Official Google Blog. October 21, 2009.

8 Paul Yiu. "Bing is Bringing Twitter Search to You." Bing Search Blog. October 21, 2009.

9 "More Tweets in Yahoo! Search Results" Yahoo Search Blog December 10, 2009.
10 "Twitter Study - August 2009." Pear Analytics. 2009.

11 Jeff Cormier. "Twitter kills two birds with one COO, ending Early Bird promotions." TheNextWeb. September 28,
2010.

12 "Top 20 Social Networking Websites: for the week ending October 9, 2010." Experian Hitwise. October 9, 2010.

13 " Top 10 Social Networking Websites & Forums - October 2009." Market Charts. October 2009.

About the Author

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Michael Gariffo is an editor for Faulkner Information Services. He tracks and writes about enterprise software and
the IT services sector, as well as telecommunications and data networking.

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