Twitter released its Q4 results, and the bird’s flown into rough skies. On the surface, it might look like things are all right. The user base grew by another 4 million monthly active users:
Ad revenues went up by $112 million, a very respectable number:
And ad revenue per user went up by 37 cents/user to $1.50 per user:
With numbers like that, why would we say that Twitter’s numbers are in trouble? The problems surface when you dig into the rates of change. Twitter’s quarter over quarter growth rate of new users has averaged 10-15 million new users in the last 3-4 years. This past quarter, it was 4 million, or a 1% growth rate. This is a significant drop:
Twitter’s been able to monetize its users better, to be sure. Why wouldn’t a huge chunk of change be worth celebrating? Like other social networks, Twitter’s revenues are cyclical. In previous fourth quarters, Twitter’s revenue has jumped 43-44% quarter over quarter. In the most recent fourth quarter, revenue jumped only 35%:
The bright spot is that Twitter’s per user monetization has continued to grow and appears to be growing sustainably:
Why is Twitter having such problems?
Twitter’s slowed growth in user acquisition is something CEO Dick Costolo attributed partly to trolling and bullying. In a statement, he accepted responsibility for the problem and promised renewed efforts to combat the problem. Beyond that, Twitter’s increased focus on monetization and turning a profit means that user acquisition and retention appears to be a lower priority. However, as many companies have learned over the years, taking your eye off the top of the funnel means that eventually the bottom of the funnel suffers.
What’s in store for Twitter?
The good news is that Twitter’s engineering team continues to roll out new features. Instant Timeline promises to offer greater content variety to new users and perhaps existing users who opt into it. New native video will provide a stickier experience.
In a look at traditional media coverage, blogs, and forums, SHIFT found that in 2014, Twitter gained on Facebook consistently throughout 2014. People talked more about Twitter than Facebook:
Combined with Twitter’s attempts to be friendlier to new users, this increased media awareness may help bolster Twitter’s new user numbers in 2015.
What should marketers and communicators pay attention to?
Native video is an obvious, immediate play. Content marketers should make use of the feature and test it with short form video.
Group direct messages have the potential for reaching groups of influencers, rather than one at a time. This feature can be abused in its current form, so make sensible use of it.
For marketers who have a mobile app at their disposal, pay attention to Twitter’s new Tweet Embeds SDK. This allows tweets to be embedded directly into mobile apps. This feature could allow your users’ and fans’ public praise of you to be shown alongside content in an app, or bite-size product reviews in a shopping app.
For marketers and communicators working with audio and podcasting, the Audio Card integration with Soundcloud provides an easy additional way for audio content to reach your audience.
Finally, the new While You Were Away feature can increase the life of your best Tweets by showing them to your followers when the log back onto the service.
Is Twitter in trouble?
The service’s lack of new user growth obscures the fact that it reaches 10% of the world’s online population. 288 million users is still larger than all but three countries, and Twitter could overtake the United States in the next year.
As long as the company continues to improve the service with new features and more engagement, it will be worth paying attention to. Marketers and communicators should test out new features as they become available, as well as segment their audiences to find true fans on each social network.
Christopher S. Penn
Vice President, Marketing Technology