This is the third in a series looking at the state of social at Facebook’s 10th anniversary. Yesterday, I looked at how Google could still win social. Tuesday, I looked at how Facebook is being too conservative and isn’t taking big risks.
Disclosure: I’m long Google ($GOOG), Apple ($AAPL), OpenTable ($OPEN) and American Express ($AXP). At the moment, I have no position in Facebook ($FB), but I have been in and out in the past. I have not traded in Twitter ($TWTR).
I love Twitter. I’ve been on it since Feb. 13, 2007. Of all the social networks I’m on — and I’ve tried pretty much everything — if I could pick only one, it would be Twitter. It provides an amazing return on the time I spend on the platform. It’s the only social network that I can honestly say has had a huge impact on my life.
Here are some examples of what I’ve gotten out of Twitter.
- I was headed to Salt Lake City and looking for restaurant recommendations. A couple of people directed me to a Mexican place called the Red Iguana. At first, I was incredulous. I’m from San Francisco and you’re recommending Mexican to me? Seriously? But their moles are amazing, and I now go there every time I’m in SLC. I also was able to connect with VC Bryce Roberts, initially through Twitter. But it led to a meeting in SLC.
- Roaming the streets of San Francisco, I saw a Tesla. Something about it caught my eye and I tweeted a picture. It turned out that someone else on Twitter had posted a picture of the same Tesla. A friend from Atlanta who follows both of us noticed this and suggested we connect. I met @Urvaksh and he guested me into a tour he was doing of the Tesla factory.
- I’d been following @RakeshAgrawal for some time on Twitter, since we have the same name. He’s the founder of SnapStream, a DVR company based in Texas. I noticed that he was visiting San Francisco and we ended up meeting for dinner. We’ve been friends ever since. (And it confuses the 216 people who follow both of us when we engage in long tweet exchanges.)
- I was in Sydney for vacation and someone who follows me on Twitter suggested that I check out some things they were doing in Sydney. That turned into a consulting project that more than paid for my trip. It contributed directly to my bottom line.
- I get better customer service. On the rare occasion that I have an issue with American Express, a few tweets and it’s resolved.
There are many, many more examples like this. It’s become an indispensable platform for me to engage with industry luminaries like Marc Andreessen (who recently took to Twitter like a madman), Fred Wilson, Hunter Walk, Bill Gurley, George Zachary, and Paul Kedrosky. I also get to engage with about 9,000 of my followers.
But as they say on TV in those diet ads, “Results not typical. Your results may vary.” The reason I can derive so much value is that I have a relatively large following compared to the typical Twitter user. If I only had 100 followers, most of these things wouldn’t happen.
The primary reason people in media love Twitter and splash their Twitter handles everywhere they can is that they get so much value out of it. (The secondary reason is that it makes them feel hip.) But their readers and viewers don’t derive the same kind of value.
Twitter’s usage reflects that. Whereas all of my friends are on Facebook, almost none of my real life friends (those that I know from before Twitter) are on Twitter. Or, if they are, they aren’t very engaged. Many of my Twitter friends have become real life friends, but again, that’s about me.
The bear case for Twitter is borne out in yesterday’s earnings: slowing user growth. The stock was down 19% this morning. I also look at how much free publicity Twitter gets. You can’t watch a TV show, go to a Web site, read a newspaper or a magazine without seeing a Twitter handle or a hashtag. Yet with all of this free promotion, Twitter’s audience is still a fraction of Facebook’s. Facebook doesn’t get nearly the same promotion. That indicates to me there’s a big disconnect in value.
Part of that I attribute to the geekiness of Twitter. I used to call Twitter the command line interface of social networking. Where Facebook had modern controls for much of its experience — you could easily share links, photos appeared automatically — Twitter required users to learn geeky syntaxes involving . @ # d. And if you didn’t do this carefully, your private thoughts might be posted publicly. Want to share a picture? You have to find a third-party photo service. Need to share a link? First you’ve got to shorten it. Most people aren’t computer geeks; they don’t want to learn codes. There’s a reason we moved away from dot commands in word processing. (If you don’t understand this reference, consider yourself lucky!)
Twitter has been working on all of these things. The user interface has gotten a lot friendlier over the years. The system has gotten more stable. Because Twitter has such disparate users — some with 5 followers and some with 40 million — they’ve got a much tougher design challenge than Facebook, which is much more symmetric.
There’s also a strong bull case to be made for Twitter. It’s only begun to monetize. It provides something that few other media outlets can — real time response to emerging events. That can be really powerful for the right advertisers.
Political advertising is a huge opportunity for Twitter. Unlike TV and radio advertising, which is expensive, needs to be pre-planned, and has high spillage, Twitter advertising can be dialed up or down in real time. Political operatives could be looking at exit poll results and be responding in real time. A certain race looks closer than expected? Crank up the advertising for that candidate. Another race is a Super Bowl sized blow out? Stop spending money for that candidate and double down elsewhere.
Yesterday, I talked about how Google could turn social network data into the opportunity for personalized airfares to liquidate unsold inventory. Twitter could do the same. A concert isn’t selling as well as expected? Combine Twitter with commerce and Ticketmaster can liquidate inventory and fill the venue. Every ticket sold is profitable because the performance is a sunk cost. Plus you have the opportunity for concession and merch sales that otherwise wouldn’t happen. Incidentally, Twitter’s new head of commerce, Nathan Hubbard, joined from Ticketmaster.
Television tie ins are another thing that Twitter has focused on of late. But they haven’t come up with a solution to the time zone issue. Much of the programming you see on network TV is shown at different times throughout the country; even more is watched on DVRs. Tweets from cast members who are tweeting in sync with the East Coast broadcast don’t make sense to West Coast viewers. They are clutter that can also spoil the show.
I consider payments and commerce a huge opportunity for Twitter. American Express has been very innovative here. You can load offers to your American Express card by tweeting a hashtag. I’ve received discounts at Amazon, Costco, and Best Buy by doing this. If you give AmEx your shipping address, you can even buy products with just a couple of tweets. Twitter is one of the few companies that has a credible shot at building a mobile wallet that people will use.
Local is the last big opportunity I see for Twitter. The challenge with local is that it’s hard, and people have been doing it wrong for so long (this includes Facebook and Google) that it doesn’t get the attention it deserves anymore. The only company that has done a great job in local (from the point of view of a long-term sustainable business) is OpenTable. There is a winning strategy in local, but no one has gone down that path. I could create a billion dollar business for Twitter in local by redefining the category. Connecting people with their communities also has another positive effect: It gives non-celebrities a chance to derive more value from the platform.
Twitter’s biggest asset is Adam Bain, who runs revenue. I talk to a lot of people at various levels throughout the Valley and I’ve never heard anyone say anything bad about Bain. He’s one of the few people I can say that about.
There is a lot to love in Twitter, but it’s not a slam dunk. Much of the advice I offered to Facebook on the need to think bigger also applies to Twitter.
But the biggest thing Twitter needs to do is figure out how to turn all of that great free media exposure into sticky, engaged users. Wall Street likes growth stories, and if your growth is declining this early in the game, you will have a very short honeymoon.
Rakesh Agrawal is a consultant focused on the intersection of local, social, mobile and payments. He is a principal analyst at reDesign mobile. Previously, he launched local, mobile and search products for Microsoft, Aol and washingtonpost.com. He blogs at http://redesignmobile.com and tweets at @rakeshlobster.
VentureBeat is studying social media marketing
, and we’ll share the data with you.