The hype has begun on the Twitter IPO. Wall Street's Greencrest Capital is setting the stage for what they're suggesting will be a 2014 IPO. OK, I can already hear the groans and I'm going to tell you exactly why you should groan. Groupon, Zynga and Facebook! And let’s not forget Facebook's recent stunt with Instagram where they tried to create revenue by stealing your property and re-selling it. This internet space is desperate to prove itself and yet there's only been one success, LinkedIn, which has a wholly different premise behind it's functionality.
As social website theory goes, the advertisers will be able to glean new information about the users and compel them to encourage or share their purchases with their friends, increasing the likelihood of John D. Consumer selling his friends on buying that new widget and then his friend's selling it to their friends and on and on until you reach the seven degrees of separation and the market is saturated. Granted, there may be some products that create a viral interest, like the Pet Rock of the 70's and Angry Birds of the 00's. Those might be well suited to what are termed the "social networks" but they're also well suited to word of mouth and are the exceptions, not the rule.
I've been tasked with assessing the Twitter IPO against the Facebook IPO and as you've probably guessed I'm not rushing to my broker trying to get in on the offering. In all fairness to try to assess if Twitter will do better than Facebook one has to think about the inherent differences and why one company might edge out the other.
On Facebook you and your “friends” are the targets and they advertisers try to get to you by using peer pressure with the “like” button and badges or your desire to belong and be competitive using games or the desire to win using contests rarely offering you something for getting your friends involved. But there’s no real guarantee that you and your friends are as weak as Wall Street might like them and there’s the rub.
On Twitter the targets are you and your subscribers. Sound familiar? Except they don’t have games, contests, badges, etc. ... just what they call the promoted tweets, filters, clients, and character limited messages which have to be very inspiring to get you to take action. A promoted tweet within TweetDeck, which is how I access Twitter feeds, sits at the very top of a filtered list in very bright colors verses the normal tweets. Sitting there glaring at you until you remove it like a round peg in a square hole.
Regardless of whether you’re using FaceBook or Twitter there are so many other options for the reader like reading that last e-mail that just arrived or averting your attention back to the latest episode of Dexter or grabbing a drink from the kitchen. With all these alternate choices vying for your attention it probably insures that the shear bulk of posts go unread regardless of how important they might be.
In summary, Facebook’s advertising is slightly more passive while Twitter’s is more in your face. Facebook’s comes from friends while Twitter’s comes from anyone restricted only by the filter. Neither is very compelling and neither is good at insuring that important message about Pet Rocks is read by the recipient; however, the promoted tweet might get enough attention to make it a bit more compelling or it might just make people angry that they’re being interrupted. I’m guessing they’ll overdo it and people will get angry. Seriously how many promoted tweets can one tolerate? Facebook has the capability of displaying multimedia in stream while Twitter requires a link.
These are the similarities and the differences between Twitter and Facebook. In the end the premise is still the same ... *advertising*! To make something stand out in such a way that a reader is willing to respond to it and therefore generate revenue for Twitter or Facebook. There's nothing to suggest that Twitter has anything special to offer over Facebook and give it's IPO an increased chance of success and in my opinion neither platform is going to come close to the major search engines where people are explicitly seeking information about products and services as opposed to talking about how they cut their hair and had a doughnut for breakfast.
Advertising has always been about being in your face or in your ears. TV is probably the best advertising medium available. It’s active, it can attack the most senses of any of the media and other than turning down the volume, you’re probably going to hear the advertisements. You have no real choice because they control the timeline. You can change channels but most likely that channel is also on commercial breaks. So we’ve learned to accept. The computer video is next but because you have to choose to watch verses read and you have a keyboard/mouse right there you’ll probably attempt to bypass the ad or turn-off the sound.
Wall Street and others would like you to think there is something lurking that has yet to be discovered. Advertisers still have to resort to visual and auditory stimulus. Short of some implant into the brain granting some new access to the consumer's mind telling them that they're thirsty for a Slushee most ads will be ignored. It's when you have someone seeking a product or service that an ad may make the difference between Sear's or Macy's, which is why search engines and websites that have content related advertising are where the rubber meets the road.
The Twitter platform pretty much restricts advertising to newspaper, magazine, billboard or phone book type ads the least effective, leaving behind the multimedia type unless they can get you to click on a link which most of us will not. Like Clara Peller said in the 80's, "Where's the beef?"
I'm not going to buy into the hype of the Twitter IPO regardless of all those Wall Street firms "recommending" the stock because I know they're just advertisers in search of their own profits.