Twitter is about to launch a major redesign of its central flowing cascade of tweets, code-named Project Lightning. Whether you call this an attempt to make live events an add-on (Mashable) or an attempt to kill Twitter to save Twitter (Wired), it is a huge shift. Soon, instead of relying just on friends to tell you what they are thinking or linking to, you can click a central button on Twitter to see what a bunch of … editors think you should see. Videos. Photos. News. All curated by experts and algorithms to help you easily learn about current events.
Twitter is about to become the Walter Cronkite of social media, an AP Wire feed of the world’s top topical buzz.
Why would Twitter make such a change? Basically, Twitter is in deep doodoo with Wall Street, despite growth that would delight most businesses. Quarterly revenue has soared from $18 million in Q1 2011 to $436 million just four years later … but investors are worried about user growth, not just dollars. In a shrinking social media bubble where startup valuation is still tied to (supposed) network effects of interconnected eyeballs, Twitter’s annual user growth has declined from 50% in 2012 to 18% in 2015 and is projected to dip below 10% soon. Twitter’s stock is down 50% from its high two years ago; investors punched it down 20% alone in April when missed earnings were announced; CEO Dick Costolo is so fed up with the pressure, he’s quit.
While Twitter now has 302 million monthly active users, that number is way below former company forecasts, which back in 2009 estimated Twitter would top 1 billion users by late 2013. Twitter missed that mark; Facebook cleared it with 1.4 billion users; and today, Twitter seems hopelessly lost behind its older brother Zuckerberg.
7 ways Twitter can survive
Investors are worried because Twitter, in their view, must generate money; money is tied to eyeballs; and those eyeballs are growing sleepy. What can Twitter do to grow?
1. Get users. The first way is to grow its user base by making it easier for people to sign up, and stick, with Twitter.
2. Boost ad rates. The second way to boost revenue is to increase ad rates, difficult given the competition from Facebook’s CPC model and Google search, both of which perform extremely well in driving low cost response.
3. Increase ad volume. The third way is to increase the number of ad units within the stream — also problematic, because higher noise levels in social networks spur customer churn.
4. Sell media space outside Twitter. The fourth way would be to increase, somehow, the number of ads sold outside the Twitter ecosystem — quite possible, given Twitter’s April 2015 acquisition of TellApart, a tech firm specializing in cross-device and cross-platform ad retargeting. Of course, this would have to be supported by good data on Twitter users, and unfortunately Twitter has little of that. Facebook was smart enough to ask you about all your interests and get you to Like hundreds of brands … but Twitter, shy in the corner, forgot to ask.
5. Sell something else. The fifth path would be to expand to ancillary revenue streams, such as selling data on users (which Twitter has little of), taking a cut of e-commerce or Twitter-inspired offline transactions, or getting into actual mobile payments.
6. Paywall. The six option would be to charge a subscription for usage by consumers. Ha. In a world where information wants to be free, a Twitter consumer paywall would be death.
7. Charge media partners fees for access. The seventh would be charging other media platforms a fee for integration with Twitter promotions, sort of an extension of its current ad model.
Hm. That seems to be about it.
Twitter can only squeeze you so hard. So it wants more yous.
Most of our proposed solutions above — Nos. 2 through 7 — require Twitter to clearly push more ads or extract more data or money from current users. That’s a dangerous game, because boosting clutter in any network can kill it. (See: email marketing and telesales.) We are already seeing signs Twitter is at capacity in pushing ads on users. When the network missed revenue targets in April, analysts said that ad revenue per user was actually up (meaning each of you had more ads in your stream) while ad performance was down (new direct-response ad units didn’t perform to standards, meaning fewer of you clicked on Twitter ads). Too many ads with too little response suggests … Twitter is wringing its current users dry with too much marketing.
So solution No. 1 above — finding new users — is the best path forward. Here, Twitter’s challenge is it has become very difficult to use as more and more features are added.
Enter Project Lightning, with an easier learning curve
The service has always been complex with a steep learning curve. The Twitter UX now requires following people, hoping they follow you back, contributing to a tweet stream, a personal profile page parsed into tweets, tweets and replies, or photos and videos, lists, favorites, direct messages, and a core communication complexity involving short text but potential photo, video, URL links, @’s, notifications, and hashtag additions, all within a character limit. Someone new to the Twitter party may now find the once-simple text service so complex they think, WTF?
But Twitter’s Project Lightning circumvents all that learning. Soon, if you join Twitter, you won’t even need to connect with anyone to dive in. You can just click a big button in the center of your screen or mobile device and get a curated list of cool news/videos/images tied to the major hot topics of the day. Obama sings at a service. A sports team wins a championship. A hot movie star exposed on the red carpet. You’ll immediately get the warm buzz of real humans sharing these events, a verisimilitude of personal connection, all concocted by the algorithmic robots at Twitter’s HQ.
It’s a smart idea, making it easier for new users to join. But this experience will be a very different Twitter — sort of a virtual curated network of no friends inside a virtual network of somewhat fake friends. A news circle in a friend circle, growing the circle of users to attract the bigger circle of marketers.
Good luck with the new button, Twitter. We know your investors are counting on it. We just hope your constant expansion into the ancillary media world to attract less-sophisticated users doesn’t kill the fun we had trying to make 140 simple characters work.