- Twitter has hired key ex- Senior Vice President at Google.
- They will be hoping he can help to boost advertising revenue.
- Twitter needs to be clear on their unique selling point.
- It may be too little too late. Are we seeing a Twitter on its way out?
Twitter (NYSE:TWTR) made the bold move on the 15th of October, to hire Omid Kordestani as their new executive chairman. Omid was pivotal in the growth of Google, and Twitter will be hoping that he can hit the ground running as soon as possible. However, he has his work cut out: Twitter isn't just only smaller than Facebook in terms of active users, but it has been surpassed by Instagram too.
Additionally, Twitter's rate of user acquisition was deemed "unacceptable" by their co-founder, Jack Dorsey.
Omid Kordestani joins Twitter at a make-or-break moment. You see, pre-IPO, investors were excited about the kind of social media network that Twitter could become. In fact, demand for Twitter stock was so high that they were able to increase the price by 25% prior to the offering. However, at time of writing, the stock price stood at $30.9, a huge 32% lower than its first publicly traded price of $45.
As it stands, an investor who bought Twitter stock on IPO day as a longterm play would have lost over 30% of their investment.
Omid Kordestani was brought into Twitter to rejuvenate them in key areas. It is worth noting that he was Chief Business Officer at Google; therefore, will have a keen eye on increasing revenue.
Can Omid Kordestani improve Twitter's Ad offerings?
Twitter's small targeting options makes it difficult for advertisers to reach the exact users they want. As a result ROI is more likely to be lower as compared to advertising on Facebook (NASDAQ:FB). Omid comes from Google, a company which made $16 billion of advertising revenue in Q2 2015. Google has mastered the science and art of providing users with relevant content and providing advertisers with scalable and laser-targeted advertising options.
It is also worth noting that Twitter recently acquired Periscope. Due to the fact that live streaming video consumption is on the rise, this presents an opportunity for Twitter to provide advertisers with some innovative solutions.
Investors will hope that Omid can bring some of the knowledge and experience he has acquired from Google to drastically improve their ad offerings.
Twitter's unique selling point
Prior to Twitter's IPO, its unique selling point was how quickly content could be syndicated through Twitter. Musicians, business people, and press flocked to it in order to get their content out more quickly. Additionally, people could react, and form a camaraderie around a piece of content.
That novelty has been lost. Bar a retweet, users aren't able to see new content from people outside their 'following' list inside their newsfeed. Sure, they have a new feature called 'Moments' however; they could do more to allow users to 'stumble' upon tweets relevant to them.
Why is this important?
Millions of users don't have the expertise required to build a following on Twitter. Therefore, when a user has a low number of followers, it may feel as if they are shouting into an empty hall. As a result, it is easy for them to move to Facebook, which promotes good content.
At this moment in time, Twitter is primarily a holding pen of followers built on another platform. For instance, a musician uploads a video to Youtube which then goes viral, and has a link/watermark to their Twitter profile. As a result, their most passionate fans follow them on Twitter in order to stay updated.
Twitter needs to transition to a place where stars are born. This would make Twitter more engaging, increasing time spent on the site, thereby increasing advertising revenue. Moreover, Twitter could create promo packages for businesses, creatives etc in order to reach a wider audience. This is what Google has done with Youtube by encouraging content creators to create channel videos.
Additionally, at this moment in time Twitter's unique selling point is ambiguous. Why should users make a home on Twitter instead of elsewhere? When Twitter is able to answer this question, and bring everyone together around that central objective, they are likely to see growth.
Twitter user engagement
Twitter's CEO Jack Dorsey will be keen to work with Omid Kordestani to increase user engagement. Facebook has approximately 1 billion daily active users while Twitter remains secretive about their figure for this metric. All we know is that they have 316 million monthly active users.
The problem is dwindling user engagement is one of the main reasons why social media companies lose their relevance. Facebook has been working hard to promote videos in the news feed, encourage developers to build apps on the platform, and syndicates quality content. All of this improves the user experience, increases engagement and pulls more users into the platform.
In conclusion Omid Kordestani has his work cut out. Interestingly, some have suggested that he is there as a Trojan horse to prepare Twitter for an acquisition by Google.
Recently, Jack Dorsey apologized to developers for "the confusion" created by some unpredictable behavior from Twitter. Twitter was known to cut access to certain apps. It is fairly interesting that this 'apology' comes soon after things are starting to turn really sour. Developers are important for any platform. This is something Microsoft and other tech companies have been taught the hard way.
The fact is why would a developer who has been through some insurmountable challenge working with the Twitter API return? Especially when social networks like Facebook have provided a cosy home which allows them to focus on their craft.
It would be amazing to see Twitter turn things around, and restore confidence from investors. However, they have to move fast or continue down the slippery slope. It would be an impressive feat if they manage it.
For now, it is wise to hold onto your investment until there is a clearer idea of their strategy going forward.