Sunday 4 December 2016

Twitter is a good long-term bet despite its woes

Published 10/05/2015 | 02:30

Claims that Twitter is doomed are wrong
Claims that Twitter is doomed are wrong

Is Twitter in trouble? Is it a commercial dead end, as some financial pundits are saying? Or could it yet find a magic monetisation bullet that will raise its prospects?

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Just 10 days ago, Twitter posted weaker-than-expected earnings results. The problem, it admitted, is advertising. It's not making as much as it thought it would. It's also not growing anywhere nearly as quickly as it was. (It currently stands just shy of 300 million users, compared with Facebook's 1.4 billion users.)

Both of these factors have some investors worried about Twitter's future. But are they right? Should we start doubting whether Twitter will be around in five or 10 years?

No. Claims that Twitter is doomed are wrong. They do not take into account underlying truths about what Twitter is and who is using it. Aside from the immediate advertising challenges - which are real - the most common naysayer narrative is that Twitter is just another service which, while popular now, could easily be knocked off its perch by something else around the corner. Just look at what happened to Bebo and MySpace, goes the argument.

"If something better comes along (and it always does), an exodus of users will immediately damage Twitter," wrote David Auerbach in a pessimistic, but impressively thorough, analysis of Twitter's prospects.

There are two reasons why this fundamental point is simply wrong.

First, Twitter users are far more grown up - and thus less fickle to behavioural fads - than those of fallen services such as Bebo or MySpace. In Ireland, Twitter is the second-most used social media service among adults, with 28pc of adults here using it, according to Ipsos MRBI. That's 800,000 adults, with over a third (300,000) using it every single day. This tallies with wider global research, with US media research firm Pew recording Twitter accounts among a quarter of all online adults.

The older you are, the less likely it is that you dump a service you're happy with. How many over-35s use Snapchat?

The second reason that predictions of Twitter's demise sidestep reality is that they ignore some market fundamentals around the timing of Twitter's rise.

Twitter (and Facebook) have grown at exactly the right time, in parallel with the world graduating onto internet communication platforms through their phones (increasingly the only device that matters).

Earlier online services - such as Bebo or MySpace - occurred at a time when a small minority of people were using online services as mainstream communication, and mostly on computers at night. They never became widely established.

But Twitter is now deeply established. While advertisers may still be trying to figure the medium out, Twitter has become the pulse of the world's media. Only the BBC could rival Twitter as a source for last Thursday's British election results. This is not something easily cast aside. Twitter is also holding its own among use by celebrities and social opinion-formers in the face of very strong rivalry from Instagram and Facebook.

In other words, Twitter is not just the latest whizzbang selfie service. It's a fixture for older people, famous people and conservative media companies.

None of this is to suggest that Twitter is bullet proof. A couple of external dynamics have moved its usefulness sideways over the last 18 months. In particular, it has become less of a social network than a mere newswire. When I started using Twitter seven years ago, it was both a newswire - as much for sports, entertainment and social updates as for hard news - and a place for conversations. You could talk to people freely. Users clicked on things each other posted. Serendipity and discovery was a major attraction.

Today, it is very different. Noise - both from individual users and organisations that think they need to tweet - is far more common than original content. Weak, repetitive commentary, recreational outrage and weak listicles dull Twitter's impact.

The result? What used to be a deeply-interactive service has now become a glance-athon, as people hesitate to tap or click beyond a headline for the (legitimate) fear that it won't be worth it. Twitter's increasingly clickthrough-shy user experience is finally reflecting years of clickbait and listicle fatigue. Even if something looks appealing, people now think "nah" and move on swiftly.

Could this also be a factor in ads struggling on Twitter? If we are more cynical about organic content, won't we tolerate ads even less?

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