There’s nothing wrong with Twitter. At least, the service itself is fine. The company’s problem is more a matter of perception, or really, a series of misconceptions. People, especially investors, confuse it with Facebook. Advertisers mistakenly see it as a promotional tool. And perhaps worse of all, many consumers think Twitter is noisy, and can’t imagine why they'd use it to tweet their thoughts into the ether.
Why do so many investors put Twitter in the same folder -- the one marked “ubiquitous social network” -- as Facebook? Analysts blame that perception on Twitter’s hasty public offering, in late 2013, which fed into the widely held expectation that it should rival Facebook in terms of growth and ubiquity.
“I don’t think it’s accurate to say there is anything ailing Twitter, unless you believe that the product should be ubiquitous, which I don’t,” says Brian Wieser, a senior analyst at Pivotal Research Group.
From the moment Twitter went public, “what investors generally failed to understand about the company -- and perhaps what management failed to fully communicate -- was that Twitter was and remains a venture-stage enterprise,” Wieser explained in a recent note. “It just happens to be traded publicly.”
As Wieser suggests, Twitter’s perception problem is closely connected to what many consider to be its unparalleled management failures.
“Twitter has failed to tell its own story,” early Twitter investor Chris Sacco recently blogged.
“If the company has a bold vision for the future, it doesn’t come across in their communication with us on the outside,” Sacco wrote in an earlier blog post. Along with a weak vision presented to Wall Street, “new product launches are soft and rarely get the attention from investors or users that Twitter’s peers drum up.”
(The latter of Sacco’s two missives came just days before Dick Costolo decided to step down as Twitter’s CEO. There is no official connection between the two events, but Sacco is no bit player. In fact, he currently claims to own more stock “than virtually anyone working at the company.”)
Long before Costolo’s ouster, critics were deriding Twitter’s questionable leadership.
Last year, venture capitalist Peter Thiel famously called Twitter “a horribly mismanaged company … probably [with] a lot of pot-smoking going on there.”
Yet despite the snub, Thiel couldn’t deny Twitter’s intrinsic value. “It's such a solid franchise, it may even work with all that,” the early Facebook investor said during a taping of CNBC’s “Squawk Box.”
And Twitter does work -- at least when it comes to tracking live events, and gauging the current zeitgeist -- experts agree.
“Twitter works well for special events -- such as sports -- for entertainment, and for breaking news,” said Tracy David, chief marketing officer at social analytics startup Shareablee.
“Also, the government category, which includes politicians, has a 30% rate of returning engagers on Twitter -- the highest among all the categories we analyze,” David noted.
Across categories, Twitter remains a data gold mine, notes Matt Wurst, vice president and general manager of social media at 360i. “Twitter’s core value is in connecting audience usage and relevant data with publishers and marketers,” he said.
Along with the early success of Periscope -- the live-streaming app Twitter bought earlier this year -- it’s also putting the finishing touches on a new real-time feature that will aggregate all the media associated with particular events.
Dubbed Project Lightning, the forthcoming feature will live at the center of the menu bar on Twitter’s mobile app, and include text, photos and video -- including content from Vine and Periscope. The service will also be embeddable anywhere on the Web as well as third-party apps.
From moment to moment, an editorial team consisting of real humans will help determine top stories and events from tennis matches to fast-moving tornados.
Rather than presenting the image-focused tweets in the traditional reverse chronology timeline, the new feature will highlight the most visually compelling images and video in full-screen mode -- ideal for mobile consumption through swiping.
At launch, Twitter is expected to cover around ten events per day, but eventually it plans to open the feature so users can create their own curated events -- even if they’re not necessarily relevant to the broader Twitter audience.
Although it’s coming too late to save Costolo, industry insiders are quite bullish on Project Lightning and its ability to revive Twitter’s fortunes.
“We're excited for Lightning because it’s an investment in one of the things that Twitter does very well, which is act as an environment for public discussion on recent events,” said Marcus Krzastek, vice president of core product at social-centric ad agency VaynerMedia.
“If it's able to encourage greater viewership around those events, it hopefully will incentivize activity around them (given the increased likelihood of lots of folks seeing your tweets),” Krzastek added.
“With Project Lightning,” said Wurst at 360i, “Twitter has an opportunity to appeal to non-users, lapsed users or skeptical adopters to download the application and log on during those moments.”
And Twitter isn’t stopping there. To more readily engage users, the company recently began automatically playing native videos, Vines and GIFs whenever users encounter them in their timelines.
The increased focus on video is a no-brainer for Twitter, experts say.
“In 2014, engagement grew exponentially on videos, especially on Twitter,” said David, citing Shareablee data. “Actions (favorites, retweets) on video content tweeted by brands grew 1163% compared to 2013.”
During the same time period, actions on video content published by brands on Instagram and YouTube grew 302% and 4%, respectively.
In tests, Twitter said the auto-play video feature was well received among users and advertisers. Participating brands saw a 700% increase in completions of Promoted Videos, according to internal figures.
Meanwhile, fighting the popular perception that Twitter is only for celebrities, sports stars, and media types, Twitter is also preparing its first major marketing campaign.
As sources recently told Bloomberg-Businessweek, Twitter is still homing in on the right slogan and strategy to effectively convey a message of simplicity, usefulness, and inclusiveness.
Along with consumers, Twitter clearly needs to do a better job of selling itself to advertisers.
“The next CEO needs to innovate and do a much better job of serving both users and advertisers,” said Forrester analyst Nate Elliott.
Indeed, according to Elliott, Forrester’s research shows that marketers are spending less on Twitter and believe they are getting a bigger bang for their buck on Facebook and other rivals. “It seems to have lost touch with marketers,” he said of Twitter.
Echoing Elliott’s comments, eMarketer analyst Debra Aho Williamson said advertisers have grown increasingly “wary” of Twitter, and especially because of its inability to keep users’ attention.
“Twitter needs to figure out how to keep people using the service, while [rival platforms] compete for their attention,” she said. “We all know the company has been struggling for a long time.”
Krzastek agrees. “From an advertising perspective, [Twitter] still suffers from its limited user data, hurting its targeting abilities beyond general demo and conversation targeting,” he said.
In his prescriptive post, Sacco said that Twitter needs to reinvigorate new user growth; figure out why nearly 1 billion users have tried Twitter, then given up on the service; and actually make its direct-response ads work for Madison Avenue.
Twitter, for its part, is actively appealing to Madison Avenue on several fronts.
Among other efforts, Twitter recently rolled out Audience Insights -- a new tool to help advertisers make sense of the network’s users. With Insights, Twitter is promising to shine a light on brands’ followers, along with anyone who engages with their organic tweets.
Marketers get their own dashboards, which aggregate information about user demographics, interests and purchasing behavior.
Among other applications, a beauty brand running a campaign to increase awareness about a new cosmetics line can use Insights to learn about its potential customers, including the beauty products they recently purchased, what fashion trends they are interested in, and even TV viewing behavior.
With Insights, brands can also compare audiences to, for example, see how information about their followers indexes against Twitter’s audience.
On the mobile front, Twitter recently began letting app advertisers reach users based on the categories of apps already installed on their mobile devices. As part of a broader “app graph” initiative, Twitter began tracking the various other apps that consumers have on their mobile devices, late last year.
With the launch of auto-play videos, Twitter also said it would only consider a view to be “chargeable” when a video is 100% in-view on users’ devices, and has been watched for at least 3 seconds.
“We’re putting this standard of 100% viewability in place because we think it’s simply the right thing to do,” David Regan, senior product manager at Twitter, wrote in a related blog post.
Going forward, Twitter plans to work with various third-party verification vendors to give advertisers more confidence that their Promoted Video content is indeed reaching the desired viewers.
Twitter is also in active discussions with both Nielsen and Moat to provide third-party verification of the metrics of Promoted Video campaigns, Regan said.
Still, some critics say Twitter may have missed its window of opportunity, and now needs to consider more drastic measures.
During a recent appearance on CNBC, Sacco suggested that Twitter’s board should consider selling the company to Google. Always up for a big takeover, that appears to be the scenario for which many on Wall Street are pining.
As a business, Twitter’s problems are easily quantifiable. In late April, the company reported first-quarter revenue of $436 million. While it represented a 74% increase year-over-year, the figure was lower than analysts’ estimates of about $457 million.
Costolo blamed the disappointing earnings on “lower-than-expected contribution from some of our newer direct-response [ad] products.” Worse yet, he said the company expected the problems to persist for the remainder of the fiscal year.
What’s more, the company still needs to address its rampant troll infestation. By many accounts, a recently launched shareable troll-blocking feature came up short.
Needless to say, deciding on Twitter’s next leader will be critical to the company’s future.
Among other attributes, interim CEO and co-founder Jack Dorsey says his replacement should live and breathe Twitter. “We’re looking for someone who uses and loves the product,” Dorsey told analysts on a recent conference.
Never far from an acquisition, Twitter’s next purchases will be equally significant. The company has reportedly held early discussions with Flipboard, which could help in the area of news aggregation and content presentation.
Meanwhile, some insiders say Nuzzel could be the missing link for Twitter, because of the news-gathering app’s ability to organize content in tweets based on their importance.
Along with its CEO search, Twitter professes to be innovating with a new sense of urgency. “We … believe much more can be done to realize Twitter's enormous unmet long-term potential,” Peter Currie, the company’s lead independent director and chairman of the search committee, said in a recent statement.
Still, only time will tell whether Project Lightning, more video, and more relevant content can keep consumers and advertisers coming back.
Warns 360i’s Wurst: “As Vine, Periscope, more ad products and other publishing solutions add more content to our feeds, Twitter must focus on the different use cases for its platform to ensure that the content each of us sees is targeted and meaningful."
If not, there could really be something wrong with Twitter.