Twitter needs new users

February 9, 2015

Twitter user growth is not keeping up with revenue. While the company continues to make money from advertising, Wall Street analysts pointed out that if the service does not get new users, it is ultimately not performing well. 

Twitter user growth is not keeping up with revenue. While the company continues to make money from advertising, Wall Street analysts pointed out that if the service does not get new users, it is ultimately not performing well. Twitter is rolling out new services this year and attempting to limit trolling on the site, but it is unclear if these measures will attract new users or not. 

User growth is the most important metric for measuring Twitter success
The New York Times reported on Thursday that Twitter released its fourth-quarter earnings statement, indicating it had 288 active monthly users. That number represents an addition of only four million new users over the previous quarter – equal to approximately one-fifth the number of users accessing Facebook on a monthly basis. Accordingly, Twitter has experienced a considerable slow down its new user growth rate. Wall Street analysts expected higher user growth – 291 million active users – and expressed their dissatisfaction. Chief Executive Dick Costolo said in a news release that he expects user growth to increase by the end of the first quarter.

“We have a number of projects in progress to grow our user base and to provide a compelling valuable experience,” said Costolo, according to the news source.

A considerable number of Twitter users are inactive
Business Insider reported that Twitter’s count of 288 million monthly active users is not entirely accurate. The social networking site noted in a press release that 8.5 percent of active users are logged in through third party sites or automatically connected for service updates – without any actual user initiated action. Accounting for this detail, Twitter’s increase of users was only 3.66 million – a significant reduction in their growth rate.

New initiatives are meant to help revive the service
According to The New York Times, Twitter is starting to explore additional ways to make money from tweets that are not on the company’s site. The social networking service will serve advertisements attached to tweets that appear in sites like Yahoo and Flipboard. Costolo also noted that a similar arrangement was made with Google, but did not supply additional details”

While the new features Twitter is rolling out should contribute to advertising revenue, it is unclear whether they will help attract new people to the site. Wall Street analysts reiterated that user growth is the only real metric by which the company’s success can be measured. Without new users, the service will ultimately stagnate and lose its appeal.

Twitter CEO apologizes for trolling and promises to address the problem 
Over the past year, there have been many instances of high profile Twitter users stating that they were leaving the site due to harsh or abusive comments. The company has frequently discussed measures to limit the amount of bullying that takes place on the site but has not been effective at dealing with it. the Escapist reported on a memo Costolo wrote to company staff, in which he acknowledged the poor management of the issue.

“We suck at dealing with abuse and trolls on the platform and we’ve sucked at it for years,” wrote Costolo according to the news source. “It’s no secret and the rest of the world talks about it every day. We lose core user after core user by not addressing simple trolling issues that they face every day. I’m frankly ashamed of how poorly we’ve dealt with this issue during my tenure as CEO. It’s absurd. There’s no excuse for it.”

Ultimately, Twitter is a service that thrives on being a mouthpiece for social commentary and freedom of expression. Users appreciate the service for its ability to transmit their communications – in 140 characters or less – to friends and social groups. Since the company went public however, it is increasingly important that earnings keep up with the hype. Revenues were strong last year, but Wall Street is forward-looking. If new users don’t gravitate toward Twitter soon, analysts will continue to lower their expectations and that will be reflected in share prices. That could lead to advertisers choosing to place their ads elsewhere, which would bode very badly for the company. 

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