Twitter is not dead, and this is not its eulogy. Enough of those have been written already. Rather, it is a diagnosis of where the company is and where it's headed on this, its 10th birthday—and what advertisers think of it.
In 140 characters or less, Twitter is the playful bluebird/social media monster that changed how we talk to one another—and even sparked a literal revolution or two. At this milestone, the social network that made "tweeting" part of our global vocabulary and culture would seem to have plenty to celebrate, boasting 320 million monthly users, a billion-dollar ad business and celebrity devotees from President Barack Obama to Katy Perry. It has become an essential player in the consumption of news, brand engagement, customer service and entertainment.
But as the whole world knows, Twitter's user growth has been stuck in a slump for a while, and questions are not going away anytime soon about whether it will be able to spur a turnaround by attracting Gen Z and younger millennials. No, not when kids flock to mobile apps like Snapchat, Instagram and Kik as they steer clear of their parents on Facebook—without giving a second thought to Twitter, seemingly.
Again, the question is: What does the predicament of social media's onetime darling mean for advertisers who have emerged as its most stalwart ally? One social media marketer who asked to remain anonymous puts it this way: "When talking with clients about millennials, Twitter just doesn't come up anymore, you know?"
For brands aiming to reach younger millennials, "it's probably not going to be top of mind, to be completely honest," Shenan Reed, president of digital at MEC North America, said of Twitter during a conference session at SXSW Interactive in Austin, Texas, last week. "If I am going to reach them with something relevant, I am probably looking at Instagram and Snapchat."
Over the course of interviews with some two dozen industry figures for this story, what becomes clear is that Twitter still has potential for growth among younger and older consumers alike, though communicating the platform's strengths remains a challenging exercise, to put it mildly. "I think it's one of the hardest product propositions in the world to define clearly what it is," notes Chet Gulland, head of strategy at Droga5. "It's harder than defining Facebook, harder than defining Instagram. It's harder, in a pithy way, to sum up all that Twitter is."
Certainly, summing up—and marketing—Twitter in 2016 will be no small task. After already establishing itself as a platform for marketers around the world, Twitter this year plans to spend more resources than ever marketing itself, signaling that the company understands it can no longer rely on its traditional promotional strategy of word of mouth. "For the first almost 10 years of Twitter's life, we had virtually nobody in marketing, which we used to be proud of," Twitter COO Adam Bain tells Adweek. "And now we realize, in retrospect, it probably held Twitter back from growth because the role of marketing in business is an incredibly powerful skill and an incredibly powerful muscle to flex."
Say this much: Twitter has met the marketing issue head-on. Last fall, it launched its first ad campaign, running TV spots during the World Series to promote its new Moments product, designed to attract users to the "logged-out" version of the site while curating top stories for users. Then, this past January, it recruited Leslie Berland of American Express as its first chief marketing officer. (Berland declined interview requests.) More recently, Twitter hired longtime Apple PR executive Natalie Kerris as vp, public relations. Kerris, who retired from Apple last April, helped launch a long line of iconic products there, including the iPhone, iPad and Apple Watch.
Might a full-on Twitter branding blitz be far behind? Probably not, according to Altimeter analyst Brian Solis. It would require something as resonant as Apple's award-winning "Shot on iPhone" push, featuring crowdsourced creative from 41 amateur and professional photographers, for Twitter to really make a splash, Solis suggests. "Twitter has never done that, nor has it invested in the articulation of what it means to your life when you see hashtags," he says. "When you follow media networks, when you see television networks spending on hashtags, they're all slivers of an experience that has never been defined."
Advertisers, marketers and analysts agree that Twitter's main problem is fostering community and conversation in a way that's relevant to younger consumers, the group most inclined to spend hours on social media platforms. In other words, Twitter needs to crack Instagram's and Snapchat's code for getting their attention.
Jamie Gutfreund, Wunderman's global CMO, sees Twitter's challenge as twofold. It has plenty to offer younger users, but many of them still have difficulty finding value in the product. She says Generations Y and Z find it tricky to navigate Twitter and, thus, don't bother trying. And because their friends aren't into Twitter, why should they be? "I think that there is a lot of opportunity that has still not been captured for brands on Twitter," Gutfreund says. "I'm very positive about Twitter. I just think it takes a lot more work to figure out, and that's challenging. It's the chicken and the egg. People go where the audiences are, and the audiences go where the friends are, and if your friends aren't there, then why are you going?"
Twitter lately has made several high-profile moves toward appealing to younger consumers. Acquisitions like Niche, Vine and Periscope have helped Twitter expand its capabilities far beyond text. It's also working to further integrate other types of visual content such as GIFs. Last month, it announced a new partnership with Giphy and Riffsy to bring GIF search to tweets and direct messages. Twitter has also started playing up video. Periscope livestreams now appear directly in the newsfeed, while the company has added video products like First View and Conversational Video Ads. They seem to be catching on. Bain said video play this past December was up 220 times year over year, which he characterized as a "sea change" for the platform.
Focusing on registered users is wrong-headed, says Brian Wieser, a senior analyst at Pivotal Research. From his perspective, Twitter continues to be a niche medium, and while it's not for everyone, that's OK—even if the company remains "focused on becoming ubiquitous." And that ever happening, he thinks, "is difficult to imagine."
Wieser says the user-base storyline is one that has haunted Twitter since the days of its IPO. The company mistakenly set unrealistic expectations among investors, he says, and has never effectively walked them back. If a company trains investors to focus on one thing, continues to promise that one thing, then fails to deliver consistent growth, they lose faith, the analyst points out. The problem, Wieser says, is that Twitter's management has far too often compared the platform to Facebook, which has grown at a much faster pace.
Bain is quick to defend the health of the company, noting that its overall share of digital advertising business is growing. "I think that Wall Street does not always understand Madison Avenue," he says. "But I believe that marketers ultimately have a finger on the pulse, and that pulse is still very much on Twitter's neck. That pulse is still beating strong for Twitter."
Kyle Bunch, head of social media at R/GA, offers an analogy that could help Bain and his team sell Twitter to a larger audience. If the platform were a digital version of a city, as Bunch sees it, it would be Los Angeles—the good, the bad, the ugly and all that comes with it.
"Twitter is a series of really amazing, vibrant communities separated by a bunch of sprawl, gridlock and road rage," he explains. "The trick is how you successfully navigate between those pockets, between Santa Monica and the beach, Hollywood and the nightlife, and how you can go between those knowing the secrets and the back alleys and knowing the people who can unlock all of it."
Therein lies the challenge: Just as many of us struggle to see L.A. as accessible, those interviewed for this story say Twitter faces the same perception among consumers—and must figure out how to fix that. (The introduction of a news-feed algorithm last month could make the platform easier to navigate.)
How much do marketers really care about Twitter's user growth? As Lou Paskalis, svp and enterprise media executive at Bank of America, puts it, "I'm not buying growth—I'm buying current [users]."
A recent report by RBC Capital Markets is telling. The survey of 2,000 advertisers found that 23 percent planned to cut back on what they spend on the platform, while 32 percent planned to spend more.
At the same time, WPP increased its investment in Twitter, from $150 million two years ago to $250 million in 2015. Talking with Adweek last month at Mobile World Congress in Barcelona, Spain, WPP CEO Martin Sorrell said he had seen "great strength" in the platform's capabilities.
While acknowledging the stalling user base and falling stock price, Sorrell suggested that Twitter was actually worth more than its $12 billion market value as of February. "I think Twitter is a very strong PR medium, just like Facebook is a strong social medium, and Google is a strong search medium," Sorrell says.
Ads flying high
With all the focus on user numbers and market value, what threatens to get overlooked is Twitter's booming ad business. After launching ads on the platform five years ago, revenue has steadily grown. In 2015, ads brought in nearly $2 billion, a 59 percent spike versus the prior year. Most of that, or $1.8 billion, came from advertising services on Twitter, while another $194 million came via third-party publishers. Mobile leads the way, accounting for 85 percent of total revenue as of Q4.
"From a marketing perspective, we use it primarily as real time, what we call marketing in the moment or marketing at the speed of sport," Kenny Mitchell, Gatorade's senior director of consumer engagement, said at SXSW. "But you see its prevalence, particularly with athletes and their ability to connect with their fans, and it's actually happening at the high school level."
Brad Feinberg, senior media and digital director at MillerCoors, says Twitter is now the company's second-largest social media budget allocation—after Facebook and its property Instagram. But like many marketers, the mystery for Miller is in whether the money it's spending is doing more than just making the brand feel more relevant. "It's great that people are talking about our brand, and if you hit it out of the ballpark, it could be a huge coup for that moment," he says. "But we don't know if people will drive business."
For Royal Caribbean, Twitter has been useful as a "big ear" for social listening, to discover how the world perceives the brand, says Ana Sofia Ayala, the cruise line's director of social media and content. Lately, the company has experimented with features like live video via Periscope, which she suggests was a "brilliant" addition on Twitter's part. The question remains whether such tactics will fill boats. "Yes, it is great, but I still struggle with, 'Are they going to be ready to take action on something?'" Ayala explains. "It is definitely more of an upper-funnel and awareness tool, for sure."
Last week, eMarketer lowered its growth projection for Twitter, estimating that the company this year will generate $2.6 billion in ad revenue globally—down from $2.9 billion predicted in the third quarter of last year—with MAUs falling to 291 million. The firm also reduced the estimated number of Twitter users in the U.S. between the ages of 12 and 24, and age 65 and up. Unsurprisingly, it pointed to Instagram and Snapchat competing for Twitter's share of younger consumers.
Despite the ongoing turbulence for Twitter, analysts don't expect the company to nose-dive anytime soon, pointing to the platform's signature service of capturing real-time conversations around news events like the presidential primaries or a natural disaster or the Arab Spring.
"If something is happening in the world, chances are it's being discussed on Twitter, and that hasn't changed," says Debbie Williamson, an analyst at eMarketer.
But now, Twitter must figure out how to sell itself better, to appeal not only to the younger consumers who currently favor Snapchat and Instagram but also to future generations of social media addicts—as it fends off untold scores of future social media platforms that will serve them.
"Twitter is a place to share memes of your life in text," says Gulland of Droga5. "I think for a lot of people, they don't think [Twitter] is for them. But even though there's been a lot of time for Twitter to correct that image, it's been pretty much lost in people's minds."
This story first appeared in the March 21 issue of Adweek magazine. Click here to subscribe.