Twitter’s IPO problem — more know it than use it
Popular social medium must show it has staying power on the stock market
SAN FRANCISCO— World leaders, the Pope and Justin Bieber post updates on Twitter, but the microblogging site doesn’t have nearly the following most people think it has.
On Thursday, Twitter unsealed documents for its initial public offering of stock and says it hopes to raise up to $1 billion (U.S.). The microblogging service also disclosed that it generated $317 million in revenue in 2012 and that it has more than 215 million active users, compared with Facebook’s nearly1.2 billion and LinkedIn’s 240 million, the Star’s Mike Lewis reported.
Only about a third of Twitter users are in the U.S. Many people know what Twitter is, but many don’t know how or why they should use it. Search for “I don’t get Twitter” and Google spits out 5.7 billion results.
Now that it is on the verge of selling its stock to the public, Twitter has to prove to investors it can broaden its appeal or risk being pigeonholed as a niche service, analysts say.
The Twitter IPO has captured the public imagination because Twitter has become such an integral part of popular culture.
It’s a real-time place for politicians, an organizing tool for government protests, a wire service for breaking news and an online hangout to talk about live events and television shows.
Even its unusual conventions have saturated popular culture. Hashtags, a way of using a word to group tweets by subject, are on movie billboards and television ads. And “tweet” no longer just means the chirping of birds in the Oxford English Dictionary.
But Twitter executives have acknowledged that the service is not as welcoming as it should be.
“We have a lot of mainstream awareness, but mainstream relevancy is still a challenge,” Twitter cofounder Jack Dorsey told students at Columbia University’s Graduate School of Journalism in 2011. Twitter has experimented with ways to make the service simpler and more personal as it faces rising competition from newer services such as Instagram and Ask.fm that resonate with younger audiences. It has also hired a former Google executive to spearhead overseas growth.
Only about a third of Twitter users are in the U.S. Many people know what Twitter is, but many don’t know how they should use it
Still, it suffers from churn. People referred to as “Twitter quitters” get curious and try the service but then bail. “Twitter is facing this dilemma as it struggles to get past a quarter-billion users: Its growth is directly tied to what the public understands about what it is and how they can incorporate Twitter into their daily lives and get value out of it,” said Brian Solis, an analyst with Altimeter Group. “But I don’t even know if two or three Twitter employees would give you the same answer about what Twitter is.”
Celebrities, politicians, media personalities, authors and other public figures have embraced Twitter, drawn to the ability to instantly publish and connect with followers. Some have turned their Twitter followings into digital gold. Tween heartthrob Bieber, for instance, has more than 45 million followers on the service. But the torrential stream of updates, with the most recent at the top — not necessarily the most important — can overwhelm beginners or casual users. Twitter also has its own language of hashtags and (at) handles and insular customs such as retweeting or modified tweeting that can be quite foreign and even daunting to new users.