By John McDonald, EO Winnipeg member and president of Canada’s Web Shop
Since its public release in July 2006, Twitter has blossomed from an SMS broadcasting service for a small company into one of the most important media of our time. Although it initially experienced difficulties in garnering the respect of the majority, (“why do I want to know what ____ had for lunch today??”) its current user-ship and buy-in from large corporations makes it impossible to ignore. That being said, things move fast in the Internet and technology world, and it is difficult to see where the profitability exists within Twitter for its owners and potential shareholders. Will Twitter still exist in two years?
From a financial point-of-view, it is easy to jump to the conclusion that Twitter will behave the way that internet companies of the .com bubble did; a lot of venture capital investment with no return on that investment. At the present time, it is easy to predict this for a company that forecasted $100-$110 million in revenue for 2011, while drawing an implied value of $7.8 billion in a private share auction in March.
This being said, Twitter’s revenue is growing quarter to quarter, and it offers many more possibilities for revenue generation. Different forms of paid advertising, such as “promoted tweets”, are currently being rolled out. Other initiatives that may come in the near future include selling data captured by Twitter, such as images uploaded by users.
Even if Twitter as a company is unsuccessful in generating enough revenue to meet its predicted share valuations and eventually goes bankrupt, this is not to say that Twitter will not be around in two years. How, then, you ask, will it still be around?
Although it faced adversity at first, Twitter as a service has proven that it occupies an important space in the social media world. 140 character updates have progressed from being about trivial topics such as what someone is having for lunch, to facilitating virtual town-hall meetings with the President of the United States.
This proves the longevity of Twitter, if not by name then in terms of the concept it embodies, in that it is a service that will be in demand by users for many years to come. Although sites such as Facebook have tried to steal Twitter’s market share, they have been unsuccessful in that they simply do not offer the kind of simplicity and effectiveness that Twitter provides. In a social media world becoming increasingly saturated with content, I for one would be quite surprised to see the end of Twitter anytime in the near future.