07 Nov

4 ways how Twitter can keep growing

Tweet

The 7-year old microblogging platform Twitter will be listed today for an initial price of $26 and investors worldwide have to decide whether to invest or not. Almost 1 million new users register daily, but the number of active Twitter users is not growing as it used to. In this article we will explain why, and in which areas new growth can be realized.

Twitter has caused a revolution in mass communication. Top politicians and famous artists don’t have to contact journalists to broadcast their message, they can just post a tweet. Also for the average person it’s much easier to spread important messages. When an airplane landed on the Hudson river, a photograph was spread worldwide within minutes. In the Arab spring revolution, Twitter and Facebook had an important role to amplify the voice of the people. Twitter also plays an important role as a conversation platform in congresses and for television programs.

Twitter is the only big Social Media Platform that allows 3rd parties to use the Twitter Platform. This allows other companies to create services useful for tweeps and help the Twitter ecosystem.

PeerReach is such a company in the Twitter ecosystem.  It identifies influential accounts and relevant content, and therefore it constructed a database of 130 million active twitter accounts. Based on our database we can determine the way that Twitter is used. Twitter does not provide very detailed information about its usage.

It’s important to note that we use Monthly Active tweeting Users, and Twitter uses Monthly Active Users as a metric. About 40% of the Monthly Active Users actually don’t tweet, but only login to the platform.

Below we see how Twitter grew in time. In 2009 the rapid growth of Twitter started and it passed the milestone of 100 million registered users. In April 2009, Ashton Kutcher was the first to reach one million followers. Now there are more than 1600 of such accounts.

Although Twitter generated revenues of USD 422M in the first three quarters, it’s still having a net loss of 133M. Here are our 4 suggestions how Twitter should continue to grow.

1. Generate revenues from non-US users

Twitter had revenues of 121 million in the second quarter, of which 75% are generated in the USA. However, only a quarter from the Twitter population actually comes from the USA, and Twitter should generate more return on its user base in Japan, the United Kingdom or Brazil. 1000 timeline views in the US generate $2.58 in revenues, whereas 1000 international timeline views generate only $0.36 in advertising income.  

The huge difference in Twitter usage per country is clear if we calculate the Twitter penetration per country. The penetration is defined as the number of monthly active tweeting users relative to the total amount of internet users in that country.

The picture displays the 23 countries with more than 800.000 active tweeting users. Of these countries, there are 14 with more than 5% active Twitter users. The Top five countries are non English speaking countries, with Saudi Arabia even having over 32% active twitter users.

Saudi Arabia and Indonesia are two countries known for the fact that most internet users don’t have a PC, but access the internet through mobile.

2.    Identify growth countries and groups

Our graph with Twitter penetration numbers clearly shows a number of green fields for Twitter. In big countries like Nigeria, Germany and India Twitter usage is still low. China is not listed because Twitter is banned from China and therefore the Chinese microblogging platform Weibo has no competition. According to the SEC filing, Twitter has considerable competion in some local markets, such as Kakao in South Korea and Line Japan.

Using the PeerReach algorithm and turk, we determined the Gender distribution per country. Globally, 49% of Twitter users is male.

3. Target the young and users on mobile.

Twitter users are young, on average 24 years. The average male is 26 years old, the average female 22 years old. Teenagers dominate Twitter. Only 20% of the tweeps are older than 30.

In the graph below we find that the average is quite different from country to country. Asian countries have the lowest age on average. English speaking countries have older Twitter users.

In most graphs we don’t show the statistical error, but here we displayed the error bounds on the average age (1 st.dev).

The driving factor for the average age is the percentage of teens among the total active Twitter population. This is very different from country to country. In 5 Asian countries the teen percentage is above 60%.

4. Improve retention for new accounts

Of the 45 million people that tweeted on October 25^th  (the day we did our count) the big majority were already on Twitter on July 25th.  Twitter has a stable group of active users.

However, low retention for new users is the weak spot for Twitter.  Of the 90M accounts that registered in the last 3 months, only 3M turned into daily active tweeting users.

For the accounts that registered in July, we counted the number of tweets until 25 October. 56% of these accounts haven’t placed a single tweet. Only 8% tweeted more than 50 times.

For new users the Twitter experience is very overwhelming. Search results are chaotic, discovery is difficult, and the trends, invented by Twitter themselves, haven’t been improved since many years.

If Twitter can improve retention of new users, it should be able to get past 500M world wide active users and the stock price will sky rocket.

Sources:
Internet usage:
http://en.wikipedia.org/wiki/List_of_countries_by_number_of_Internet_users
http://www.forbes.com/sites/roberthof/2013/10/03/revealed-in-ipo-filing-twitter-still-losing-big-money-even-as-2012-revenue-tripled-to-317-million/

Twitter booming in Saudi Arabia:
http://blog.globalwebindex.net/twitter-usage-is-booming-in-saudi-arabia/
http://www.arabnews.com/news/452204

SEC filing:
http://www.sec.gov/Archives/edgar/data/1418091/000119312513400028/d564001ds1a.htm