\nBut, they\u2019re struggling to sustain user growth<\/strong><\/p>\n
Twitter\u2019s growth in active users has slowed much more quickly than markets were expecting, leveling to about 300M MAUs\u00a0in the\u00a0most recent quarterly earnings. While it normal for growth to slow over time simply given a larger user base, Twitter was expected t![\"user](\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2015\/10\/user-growth-195x300.jpg\")
o reach near Facebook levels when it IPO\u2019d, and its public positioning has placed more pressure on the platform\u2019s ability to scale. Reports suggest that Twitter has already had 1 billion users try and subsequently leave the platform.<\/p>\n
Several factors contribute to Twitter\u2019s slowing user growth. For one, Twitter is a relatively<\/em> confusing service; features are less intuitive than Facebook, and it becomes more difficult to understand who you should follow since there is less\u00a0direct correlation with\u00a0a user\u2019s immediate\u00a0social network. Rather, users follow individuals they are interested in, which could be for a variety of reasons beyond social connections. Second, Twitter messaging between users has long been public tweeting back and forth. Twitter only released private direct messaging in early 2015, which has existed on Facebook for years. And finally, while a social graph can be developed quickly and is based on a user\u2019s daily interactions with friends, family, and acquaintances, an interest graph of following people and trends outside of your daily interactions takes much more time to develop properly, and may slow user uptake of Twitter\u2019s platform.<\/p>\n While 300M users is still a very sizable network, the problem that Twitter is facing is its ability to use indirect network effects to properly monetize its platform. Like other social networks, Twitter has turned to advertisers hoping to use promoted tweets as a m Moreover, advertisers are attracted to scale, and Twitter\u2019s failure to grow significantly leaves it susceptible to other social networks that could take its share of the advertising pie. For example, services like Snapchat and Pinterest \u2013 both still private \u2013 are growing quickly, and Instagram recently surpassed 400M MAUs. These other services also offer native advertising platforms which may be more consumer-friendly relative to Twitter\u2019s 140 character tweet.<\/p>\n Finally, Twitter\u2019s product stagnation has limited innovation that could create new value for its users and advertisers alike. The product remains almost unchanged from its founding, and still sports the reverse chronological timeline. This is in contrast to Facebook which has altered its News Feed and product to juice user growth and value around its ecosystem (e.g., splitting out Messenger despite user complaints; altering News Feed to show content algorithmically \u2013 both of these benefit advertisers at scale in the long run). Twitter has been held hostage by its power users to keep the reverse chronological, unfiltered timeline, and as a result, it fails to grow and create opportunities for advertisers to reach its audience more effectively.<\/p>\n <\/p>\n Sources:<\/p>\n http:\/\/www.wsj.com\/articles\/twitter-revenue-jumps-1438114370<\/p>\n http:\/\/blogs.wsj.com\/cmo\/2015\/07\/28\/twitters-ad-revenue-growth-comes-down-to-earth\/<\/p>\n http:\/\/www.theguardian.com\/technology\/2015\/may\/02\/tweets-wall-street-investors-fear-twitter-advertising<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Twitter’s ability to capture users quickly led to its early rapid growth, but recent slowing in active users and the rise of competing social platforms questions the strength of their direct network effects, and could potentially have lasting consequences on their ability to monetize their offering through indirect network effects. <\/p>\n","protected":false},"author":84,"featured_media":1181,"comment_status":"open","ping_status":"closed","template":"","categories":[514,515,467,438,513],"class_list":["post-1180","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-advertisers","category-direct","category-indirect","category-network","category-user-growth"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/competing-with-network-effects\/","yoast_head":"\n
\nAdvertisers want scale<\/strong><\/p>\n![\"ad](\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2015\/10\/ad-growth-300x228.jpg\")
eans to reaching users. But with a limited user base, there is a limit to how many dollars each user can provide before upsetting them–or worse, losing them–because of too many ads cluttering their feed.<\/p>\n
\nOther platforms may beat Twitter\u2019s offerings<\/strong><\/p>\n