Twitter Isn’t Making Any Money Yet Due To User Experience, Expect That To Change

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Twitter Focused On User Experience Like Facebook: Expect That To Change:

Twitter just filled for a $1 billion initial public offering and will be known under the ticker symbol TWTR.  On the heels of the recent Facebook IPO, investors and analysts are doing a deeper dive into the company’s prospects of gaining share in the social media space.  Twitter has over 200 million users compared to Facebook’s over 1.1 billion, but the social media/mobile firm isn’t making any money.  Twitter released an S-1 filing that showed the company gets over 500 million tweets per day but can’t monetize them with only 2,000 employees that need to be paid.

Wall Street is worried that Twitter could be a flop before it even pops.  The risks to the company include becoming outdated, competitors, spam and disengaged users.  The upside potential is enormous but advertising efficacy is questionable compared to other platforms like Facebook or Google PPC.  Simply put, Twitter needs to shake things up, promoted tweets and follows won’t be enough to cover server costs and grow social media market share.

Why isn’t Twitter making money? The company correctly focused on the user experience, but now they’ve got to pay the piper – or investors that is. UX may fly off the site like a blue bird.

Don’t be surprised if you see ads in the newsfeed, sidebar or background along with other ways to monetize Twitter via mobile.  This may cause some users to adopt another platform but Twitter has clearly reached critical mass and people who have amassed thousands of followers won’t quickly change to a brand new social media platform. Twitter recently announced a deal with Trendrr a social media TV analytics firm so expect more acquisitions and partnerships with old media.

The social media sector will continue to grow exponentially for the next few years. A quick look at the widely-held (but still thinly traded) social media exchange traded fund SOCL shows the sector is expanding and Twitter will soon become another ‘profitable’ company included in this index.

socl 6 month chart ended october 4 2013 technical analysis

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