Twitter's customer conundrum

The social network's move to 280 characters is necessary to grow profits, but does it risk its long-term survival?

by Adam Gale
Last Updated: 27 Sep 2017

Omg Twttr’s dblng chrctr lmt 2 280

In case you don’t speak 1990s text, that’s how you’d express surprise that Twitter is planning to double the character limit in tweets to 280 - in 34 characters. There’s an art to expressing yourself succinctly, which is very much part of Twitter’s appeal. Concision is mandatory. No wonder journalists love it so much.   

CEO Jack Dorsey’s decision to trial doubling the character limit, thereby escaping the bounds long ago imposed by SMS, illustrates a familiar business problem. What do you do when your current offering, product or business model has taken you as far as it can? How do you change it without alienating your current customer base?

Let’s be clear: Twitter loses money like a high-growth tech company, but it’s no longer actually growing like one. Between 2012 and 2015, the company’s compound annual growth rate for revenues was 91%. Last year, that had slowed to 14%, with revenues at $2.2bn and a loss of $456m.

User growth has slowed dramatically, but the real problem is monetising the more than 300 million users Twitter actually does have. Dorsey’s decision has to be seen in that context. It’s the same reason he introduced live video and, indeed, cut the global workforce by 9% last year – Dorsey is prioritising profitability over growth.

That’s sound business in his position, of course it is. But it’s also a dangerous game. Social media, like traditional media, is unusual in that it has two very different sets of customers. One set, the advertisers, pays. The other, the users, doesn’t. Yet without the users, the advertisers won’t come. And what pleases one often displeases the other.  

Dorsey may have spoken of removing a ‘frustration’ for current users, but that has been widely (and amusingly) lampooned. If anything, the 280 character limit introduces a frustration, and arguably risks Twitter’s long-term place in the market.

Doubling the character length may seem trivial to non-users (280 characters isn’t exactly War and Peace), but it tampers with what makes Twitter unique. If you’re going to post much longer messages, why not just use Facebook? Answering that very question is essential if Twitter is going to be around in ten years’ time.

Dorsey will be trying to ensure Twitter is both relevant to users and to advertisers but, judging by the changes he’s introduced since returning to the company in 2015, he’s prioritising the latter. So far, it hasn’t really worked – revenues were down last quarter, and losses were up.  If his second tenure as CEO of the company he co-founded in 2006 isn’t to share the characteristic brevity of its product, this will need to change soon.

Image credit: Keiyac/Flickr (creative commons)

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