Jack Dorsey accepting Stanford’s Entrepreneurial Company of the Year Award in November 2011. Photo: Steve Jurvetson | Flickr CC.
Twitter released its second quarter earnings report this week and surprised Wall Street with their revenue performance. They added 2 million users. Sales reached $502 million, besting investors’ expectations of $481 million.
Sluggish user growth remains a problem. And that’s serious problem for a micro-blogging platform designed to leverage user content with advertisers to generate profit.
Facebook regularly reports good statistics to advertisers—1.4 billion monthly users and nearly 900 million daily users. Twitter user engagement falls flat in comparison with their total global users estimated at 300 million. Only 50 million of those users are located in the U.S.
Chief financial office Anthony Noto admits that Twitter reach has fallen short and that user statistics are not encouraging. “We’ve only reached early adopters and tech enthusiasts. And we’ve not yet reached the next cohort of users known as the mass market,” he said during the company’s earning call.
Twitter’s revenue stream comes from advertising. It’s earning potential is revealed during global events or when major news stories are breaking. The 2014 FIFA World Cup generated over 650 million tweets.
Advertisers pay to be part of those powerful streams by paying to promote tweets for their products and services. However, since it’s a live stream—a big conversation—advertisers must push nuanced tweets that engage the audience.
The public argues that Twitter is too difficult to use. Jack Dorsey, interim CEO, says that new Twitter products currently under development will make Twitter more user friendly.
During the earnings call Dorsey explained that there is one question their organization must answer if they expect to build a sustainable user base, “ ‘Why Twitter?’ must be articulated clearly. What should you expect from Twitter? To be as easy as looking out your window to see what’s happening in the world, directly from the source.”
