Twitter Still Needs to Make its Case for Some

With its impending IPO, Twitter has become a popular topic for many in the digital media space.  Much of this discussion centers on how profitable Twitter’s advertising model stands to be now and in the future.  Some argue Twitter lacks a compelling business model.  In a recent article in the Wall Street Journal article ("Twitter Advertisers Say Service Needs More Users"), a handful of digital advertising professionals outlined that Twitter’s users based – now approximately 218 million – is still too small to be compelling from a revenue standpoint.

Appropriately or not, Twitter and its user base are most often compared to Facebook.  The social media platform currently boasts 5 times more users than Twitter.  Additionally, it users dynamics are arguably more favorable than Twitter.  For many checking Facebook is a daily activity.  However, Twitter’s user base is more apt to spikes in use, particularly around big events.  For advertisers, this makes Twitter the less attractive option between the two as they want social media to be an avenue to access consumers 24/7. 

As further outlined in the WSJ article discussing Twitter, the proof is in the revenue.  Twitter garnered $317 million in advertising revenue, paling in comparison to Facebook’s $4.3 billion.  Additionally, with a slowing rate of growth in users, there appears to be basis for analysts’ concern.

However, there is one aspect of the comparison between Facebook and Twitter which cannot be assessed with historical user or ad revenue numbers.  For many, Twitter is emerging as the new platform for communication of news and current events.  This is a space Facebook has failed to breech, as it has remained largely confined to social and personal discourse.  The relevance of Twitter as a medium for spreading news was well illustrated during the Arab spring, and it will continue to hold a similar stature for large current events going forward.   There is room for Twitter to grow a competitive platform from this advantage, and it will be interesting to see if Twitter appropriately leverages this characteristic going forward.