Twitter’s blockbuster share issue last week, when the microblogging site listed on the New York Stock Exchange, took its market valuation to $22 billion after it started trading.
Now, in the July-September the third quarter, Twitter made only $168 million in revenue.
That was more than double the level in the same quarter last year. But most of the excessive optimism in the market that gave rise to talk of a new “tech bubble” reminiscent of 1999-2000 stems from expectations of the trend sustaining for years. Twitter’s stock filing states its number of active users at more than 200 million although registered users exceed 500 million. There is a long way to go.
We can quibble on the financial valuation, but it is perhaps relevant to ask of Twitter’s relevance in the social media landscape. I got an inkling of it last week, when on two occasions, without directly contacting them, I mentioned two brands with which I had to resolve problems. Within hours, I got contacted by both cases, with an offer for help.
Twitter’s own officials liken the site to a townsquare — so the word-of-mouth spread about by trending topics (denoted by the now-famous # (hashtag) mark) is something that brands are keen to address through “promoted tweets” or clever use of topics linked to the product or service.
About 15 years ago, one of the failed “dotcom” startups I met was called Planetcustomer, and its business model was all about a site that would register customer complaints that companies will take note of. Now, Twitter seems to be doing that in an open way.
Product recommendations involving total strangers, and complaints involving word-of-tweet spreads are giving a unique flavour to Twitter. The company’s financial success will depend on how companies representing brands use this. Twitter is not about advertising, but ‘brand buzz’.