I am becoming increasingly concerned regarding Twitter’s long-term ability to monetise its service.
- It was some months ago when Instagram pulled the plug on its Twitter API that allowed users to view Instagram photos inside tweets.
- Users wanting to display Instagram photos can now only post a link which takes the user to the Instagram site to view the photo.
- The reasoning was obvious. Twitter users looking at Instagram photos via an API do nothing for Instagram but help Twitter learn more about its users.
- If Instagram could get this activity moved to its site, then it would be Instagram grabbing the usage, learning about its users and improving its ability to sell advertising.
- The fear was that brands that were using this arrangement to interact with their customers would disengage from Instagram and just move everything to Twitter.
- However, the gamble has paid off as data from Simply Measured shows that while engagement with Instagram photos on Twitter has fallen, there has been a corresponding pick-up of activity on FaceBook and Instagram.
- This is basically telling me that in a straight choice, brands tend to prefer Instagram and FaceBook as a way of interacting with their customers rather than Twitter.
- It is here the weakness of Twitter is ultimately exposed as a service that is based on text.
- Text is great to get going with but, as BlackBerry has found, it carried little weight as users become more sophisticated.
- This essentially means that what people use Twitter for is limited and to break out of that mould will be difficult.
- Twitter has made some strides in this direction with the enablement of e-commerce with services like Chirpify and its relationship with American express, but there remains a huge hill to climb.
- At the end of the day, if brands prefer to use Instagram and Facebook to relay their message, they will pay more for it and the advertising that can be sold around that will be more valuable.
- This reinforces my view that as an advertising and revenue generation proposition, Instagram and FaceBook are meaningfully more valuable than Twitter.
- Twitter has fantastic reach and a huge user base but users don’t spend that much time on the site and the usage is of a type that is hard to monetise.
- Hence, in any IPO Twitter should be priced at a discount to FaceBook and the other internet brands.
- However, I suspect these arguments will fall on deaf ears in the scramble to throw good money after bad.
Blog Comments
Twitter – Show me the Money | Radio Free Mobile
March 7, 2013 at 10:26 am
[…] Twitter has made moves in this direction with its relationship with American Express, Chirpify and o… but I need to see more not to be worried about justifying the valuation. […]