Can Twitter make shareholders, users happy at the same time?
With IPO behind it, the social media powerhouse’s commitment to some long-held ideals could be challenged
The Twitter logo on the New York Stock Exchange on Thursday.Andrew Burton/Getty Images
Shannon Seek, an avid Twitter user, has some advice for the company about any future changes to its microblogging service: Keep it simple. Avoid flashy ads. Most important, ask what users want first.
“As long as they stay in touch with the original intention — the purity of it — I think it will be great,” said Seek, a business coach who lives just outside of San Francisco.
Twitter began trading Thursday morning at $45.10 under the ticker symbol TWTR and climbed from there, hitting at least $50 within the first hours and closing at $44.90 on its first day of trading on the New York Stock Exchange.
On Wednesday evening, the company set a $26-per-share price for its initial public offering — valuing it at more than $18 billion.
The IPO underscores the vital role Twitter plays in communications in the digital age. More than 230 million people use the service to post brief messages (no more than 140 characters, of course) about presidential politics, the Super Bowl, Miley Cyrus and, obviously, much more.
But the IPO also puts Twitter under intense pressure to ramp up advertising and add new features. Shareholders in public companies inevitably demand steady growth and profits. Twitter executives will have to walk a fine line to avoid annoying longtime users. They must also face difficult decisions about whether to abandon their support of free speech to make headway in tightly controlled but potentially lucrative countries such as China.
“Every company is pressured by shareholders,” said Brian Solis, an analyst with Altimeter Group. “And shareholders don’t always have the best interest of users at heart.”
What Twitter plans to do is to make its notoriously complicated service easier for newcomers to use. Many people create accounts and then quickly stop using them. Adding more video, such as sports highlights and weather updates through partnerships with the likes of ESPN and the Weather Channel, is another priority. The goal is to make the service more of an entertainment destination and not just a place for short messages.
Changes already afoot
Where Twitter is likely to face greater resistance is in its push for more advertising revenue. People are quick to complain, and perhaps defect, if they’re bombarded with too many marketing pitches. In the past year, Twitter introduced video ads. It also hired an e-commerce veteran to bring online shopping to the service.
The biggest change took place two weeks ago when Twitter started automatically showing photos in posts rather than requiring users to click on a link to see them. Left unsaid was the fact that advertisers can now also post photos, which are as unavoidable as banner ads. Some users grumbled about the images being distracting. Those on mobile phones can change their settings to eliminate the images from their timelines, but people on desktop computers cannot do so.
Twitter is also giving advertisers new ways to target users, in order to make its service more attractive to them. It’s a delicate topic, given the privacy concerns over Facebook and its practice of scooping up as much information as possible about users to better tailor ads to their tastes. On Twitter, marketers can choose who sees their pitches based on gender, what users have clicked on in the past and ZIP code. For now, though, Twitter’s user data isn’t particularly broad, although the company says it plans to increase its ad-targeting capabilities.
Focusing on marketing is a big change for Twitter, which for years emphasized luring new users over making money. When it did introduce ads, they were minimalist and largely indistinguishable from regular posts. Although Twitter’s revenue is growing quickly, it’s far from enough to cover expenses. Since 2010, the company has lost more than $400 million.
Matt Bello, a teacher in San Francisco who uses Twitter to keep up with education policy, but not to post his own messages, said too many ads would turn him off from the service. He complained that advertising on Facebook has already become overwhelming, and said he hopes Twitter will avoid making the same mistake.
“I really hope it doesn’t, because I’d be using it a lot less,” Bello said.
Solis, the analyst, voiced optimism that Twitter’s executives would find the right balance.
“It has to monetize its service in some way or form,” he said. “For users to complain about that is selfish.”
Changes inevitably create some backlash. But in the end, said Solis, Twitter’s track record speaks for itself.
What about China?
Like many online companies, Twitter will have to weigh whether to expand into countries that restrict free speech. Putting staff on the ground in such places typically requires censoring specific subjects.
A number of companies have sacrificed their ideals to make inroads in China. Google, with its self-described mission to “organize the world’s information,” is perhaps the most glaring example. In 2006, the search engine started censoring search results in China about certain topics, such as Tibet. Eventually, after failing to gain many users, the company pulled its Chinese-language search engine from mainland China and relocated it to Hong Kong, where censorship isn’t required.
Jillian York, director for international freedom of expression for the Electronic Frontier Foundation, a digital rights group, said Twitter’s track record in free speech and privacy is strong. But she said maintaining that reputation will be more difficult as the service tries to expand into more countries.
“I’ve heard a lot of people expressing concerns that, with the IPO, Twitter won’t maintain the same values,” York said. “I think there’s strong market reasons for them to keep up their end of the bargain with free speech.”
China currently blocks Twitter. A homegrown microblogging service, Sina Weibo, is heavily censored.
Change isn't always bad
Seek, the Twitter user, said she always expected the company to file for an IPO and is glad that it can do so. What she hopes is that it will use the proceeds to improve the service.
In particular, Seek wants to be able to filter messages into different streams. Posts from family, friends and colleagues, for example, could be sent to separate pages. She also recommended that Twitter develop some paid services for heavy users. Phone support for troubleshooting problems and an ad-free version of the service are just some of her ideas.
With six accounts, Seek is admittedly a bit of an outlier among Twitter users — a power user, of sorts. She can spend hours a day posting positive thoughts, links to amusing articles and comments about television shows. Just keep the service’s design plain, she said. Advertising is fine as long as it remains low-key — no big ads, please — and tailored to her tastes.
“As long as they stay grounded, I can’t imagine they’ll do anything wrong,” she said. “I hope for the best.”