Environmental Report for Twitter Inc.
November 11, 2013
I. History of Twitter
II. Leigh Scheffey: Twitter and its IPO
III. Ryan Auerbach: Twitter TV Remote
IV. Jason Davis: New Visual Display
V. Erin Olitzky: International Markets
I. History of Twitter
Twitter is a Social Media site that was founded in 2006 by Jack Dorsey, Evan Williams, Biz Stone and Noah Glass which has now turned into one of largest Global internet media sites. It began as a way to send virtual SMS messages between friends, and has expanded to a marketing, advertising and social media powerhouse. Twitter refers to itself as “a real-time information network that connects you to the latest stories, ideas, opinions and news about what you find interesting.” 10 It is most notoriously known for its system of allowing short bursts of 140 character “Tweets” to be posted onto the sites stream that today is a international community of over 500 million users. It has also coined and created the idea of “hashtags” which allow users to create and search through the site by creating bookmarks by inserting the “#” sign in front of any piece of text.
The company has been private since it’s launch in 2006, however it has announced that it will be going private within November of 2013.10 This launch has had investors crazed over its initiation into the market as it will be competing with other companies, such as Facebook, who went into the market in 2012 with a notoriously high IPO. Twitters soon launch into the market, and the noted problems with other companies has created a stir about the potential problems and opportunities on the horizon.
Due to the large wave of businesses using Twitter as an advertising platform, there is is a concern as to how the entrance into the public may affect their advertising platforms across the globe both negatively and positively. Investors and critics have speculated the emergence of new advertising platforms and products.
The introduction of “hashtags” into television shows has created a new market for companies to create “visual displays” to interact this media into their shows. Many see a market here for creating an interactive television that allows you to display your Twitter feed and use it to navigate and discover what’s going on, as it’s going on. Another anticipated product is that of the “Twitter TV Remote” that, with our without the interactive TV could allow you to navigate through hashtags to instantly explore shows and advertising on a whim. Twitter’s potential for growth within the next quarter is illustrious.
II. Twitter and its IPO
What: This month Twitter is releasing their company into the market publically. Due to this there has been much speculation about their Initial Public Offering. “The San Francisco company increased the price of its shares from $17 to $20, in initial estimates, up to $23 to $25 a share” 4 this has been largely talked about as it is known that Facebook entered into the market at a much higher market price of $38 3 a share. As a result of this Facebook was hit with a large loss and ridiculed over their poor market entry timing, and high IPO.
Why it’s Important: In comparison with Facebook’s entry into the market in 2012, analysts show that Twitter’s shares will most likely double. Twitter has taken different steps to avoid making the same mistakes as Facebook by timing their market entry, and keeping their IPO greatly lower than that of Facebook. According to the Wall Street Journal, “…U.S. stocks began to slide just as Facebook started its roadshow in May 2012. The social-media ETF dropped 7 percent in the two weeks prior to Facebook’s offering, in line with the market.” 2 Like previously stated above, the height of market entry price may not be a problem, but instead the timing of market entry. “Twitter Inc. may have timed its initial public offering just right…tech-heavy Nasdaq Composite [is] up 31% this year and 9.4% in the past three months.” 2
The Plan: To keep investors interested in Twitter’s shares our plan of action is to draw attention to the positives that may come as a result of Public entry. The marketing goal is to keep Reporting with a low IPO and high market prosperity by drawing reports, ads and campaigns to the positives surrounding market timing, price and shareholders’ opinion. According to Doug Kass a hedge-fund manager, once a Twitter naysayer, “[i]t is my view that Twitter’s shares will likely double in the first month of trading — or maybe sooner”. 1 He is unconcerned that a low entry into the market may suggest a loss in potential or initial gains. “Bottom line: I would pay up to $32.50 a share for Twitter’s common shares” 1 says Kass. With that being said here are some ways to further promote Twitter’s new IPO changes:
- Highlight predictions of the growth of the company’s stock and the company as a whole (focus on other aspects of the company other than just the stock)
- Introduce Twitter within Television and Film platform to expand advertising range
- Publish press releases highlighting the prosperous year for the NASDAQ
- Continue to inform the initial investors about IPO potential and expansion
III. Twitter TV Remote
What: The outburst of social media over the past few years has had massive effects on other media outlets including newspapers, magazines, and even television. Twitter serves as “a real-time information network that connects you to the latest stories, ideas, opinions, and news about what you find interesting.” 10 With this being said, the average Twitter user can obtain all of their information from one continuous screen that is their timeline.
Why it’s important: As of recent, television networks such as Comcast have been noticing that potential viewers are finding information about the show through their timeline, rather than tuning in to watch the show. A Nelsen study in August showed that the volume of tweets leads to noticeably higher television ratings 29 percent of the time.9 To capitalize on the relation between tweets and television shows, Twitter announced that it has struck a deal with Comcast and NBC Universal in which tweets will include a button that will let people switch the channel straight from their timelines. Viewers will be able to log into a Comcast Xfinity account directly from TV show related tweets. From there they can change the channel to the desired channel with the desired show or even set up a recording with Comcast DVR. Another function of this contract will allow for viewers to watch the show directly on the device they are using Twitter on.9 All user who are not Comcast subscribers will be redirected to the NBC website.
This opens up multiple doors for Twitter, both in terms of new users looking to keep up with a new and useful feature, and in terms of their IPO price being unveiled later this month. If all goes well Twitter could have other networks other than Comcast looking to make the same partnership. Allowing more TV shows to be viewed and therefore including an overall greater number of people using Twitter.
The Plan: If other TV carriers such as Dish or Directv strike the same deal it will open up more viewers and users which will no doubt increase the appeal for the shares. As a result more consumers will invest in Twitter’s IPO and Twitter can hopefully avoid the problems that came up when the other social media monster, Facebook went public. If Twitter can successfully carry out this deal with Comcast it will open up a entirely new development within the industry. This new metric to television has endless opportunities in terms of positive coverage and feedback from old and new users who wouldn’t be as active on Twitter had the remote function not be available.
- It is a unique initiative that only a layout such as Twitter’s timeline can carry out.
- No other company will be able to convert conversation about a television show into direct consumption for the network, leading to positive relation between tv show related tweets and number of viewers on show.
IV. New Visual Display
What: Social media is expanding at a rapid pace. As we live in this social networking era it’s important for a company to keep up with the changing demands. On October 29, 2013 twitter created a new visual display for their users by integrating competitors services.7 Forbes, along with many other prominent publications broke the story, here’s what they had to say.
Why it’s important: Twitters recently developed news feed includes ready to view visual content, making it efficient for users to stay within their timeline. Twitter has not changed their visual display since 2006; this has caused users to look for ways to opt out of the change. Many others are embracing the change as a ‘easy way for users to engage instantly with visual content’.7 The social networking sector has continued to redefine their services in an effort to gain customers. For example, just recently Instagram added a video setting to their service.
The simplicity of Twitter’s new photo sharing tool has grabbed the attention of retailers who use social media for e-commerce. According to Acquity group VP David Chang “The new Twitter design presents a great opportunity for brands and retailers to reach customers with timely and rich, yet concise content”. Also, with the addition of 6-second vine videos to the news feed Chang says “pictures and short videos can convey an incredible amount of information quickly”,7 which is a recipe for success in the advertising industry.
The Plan: The visual introduction has drawn complaints by twitter users for the barrage of advertisements filling their timelines. Chang believes that brands should be respectful to their followers and take the change slowly to avoid backlash. As twitter continues to stand by their change, it’s important to properly deal with competitors and their reactions to matching the social networking industry demanding modifications.
- As twitter focuses on going public they have also chose to expand their services. At a time when attention is needed, Twitter has put themselves in a situation to get media coverage and consumer communication whether it is positive or not.
- This is an opportunity to develop Twitter into a multi-dimensional tool similar to Facebook, as they look to expand their market of users and it’s value in the advertising business. This is the beginning of expansion, which could lead to automatic links being displayed from sites such as YouTube and Google.
Twitter has been known as the platform of 140 characters or less. This risky redesign by twitter may take a while to become the norm. But it’s needed today to compete with the ever-changing Facebook platform. It’s a race to land the most mobile advertising dollars, which has been adopted by Facebook and just recently Instagram. Clark Frederickson, a vice president at the digital research firm eMarketer said about the redesign “At the very least it allows users to perform some of the same actions that helped Twitter’s competitors grow quickly.” 8
V. International Markets
What: According to the New York Times, with Twitter approaching its initial public offering of stock, many are looking forward to purchasing their share in the company. However, with over 232 million users, over seventy-seven percent of them are outside of the United States. This means that Twitter needs to figure out how to make money off of these abroad users. The most common way for a public company like Twitter or Facebook to make money is through advertising, which is proving to be a problem for Twitter. Although Twitter is proven to be a popular social media site globally, it is proving harder to convince these global companies to purchase ads through Twitter. 5
Why it’s important: This is important because Twitter is a young, popular company that needs to figure out how to get international advertisers to buy ads with them so that they can make money rather than lose it, which is what they are currently doing. In 2013, Twitter made 422 million dollars in revenue but spent 548 million dollars in costs, giving it a total loss of 126 million dollars which added to its relatively small size compared to other social media sites like Facebook is a deterrent for many international companies with advertisements to purchase.5
However, Twitter did introduce a self-service advertising system. This means brands are able to buy ads on Twitter without talking directly to a sales representative. Twitter plans on bringing this to the global market soon.5
The Plan: Twitter’s plan would be to use the publicity that is coming with the public offering of stock to show international companies that Twitter is a beneficial way to get their product out there. Many small start-up businesses as well as large businesses like Starbucks, Samsung and Ford use Twitter to get their brand and products out into the global market.6
- By working with these companies to create advertisements and articles in publications such as The Wall Street Journal and Forbes magazine about how Twitter has been beneficial to these businesses many international businesses may be less skeptical to use Twitter for advertising.
- Another approach would be to talk to the people who work in the fifteen Twitter offices that are located around the word, to see how to best reach the companies in their area. Twitter however, is tackling this issue of global advertising head on and has hired many former employees of Facebook and Google to lead its global advertising expansion. This is the information that Twitter needs to get out there.
- Through press releases and in company newsletters so that these international companies see that Twitter is interested in making their site one in which would best serve their customers no matter where they are located.
Issue Twitter Needs to be Aware of:
The one thing however that Twitter does need to be aware of is that if these tactics do not work or Twitter decides not to employ them, articles like this one from the New York Times could be damaging to Twitter and its revenue this upcoming year, forcing Twitter to make sure their current positive image is not damaged.
VI. Primary Source
1. Russolillo, Steven. “The Wall Street Journal.” MoneyBeat RSS. WSJ.com, 28 Oct. 2013. Web. 5 Nov. 2013.
2. Benoit, David. “Twitter IPO Catches Market Timing Just Right.” MoneyBeat RSS. WSJ.com, 28 Oct. 2013. Web. 6 Nov. 2013.
5. Scott, Mark. “Ads Scant When Twitter Crosses Borders.” New York Times [New York City ] 3 Nov. 2013: 1-2. New York Times. Web. 3 Nov. 2013.
7. Dishman, Lydia. “How Twitter’s New Image Feed Could Boost E-Commerce.” Forbes. Forbes Magazine, 31 Oct. 2013. Web. 05 Nov. 2013.
9. Brustein, Joshua. “Why Twitter Wants to Be Your TV Remote.” Bloomberg Businessweek Technology, 9 Oct. 2013. Wed. Nov. 2013
3. Oran, Olivia. “Twitter’s Goal in IPO: To Avoid Becoming Facebook.” Reuters. Thomson Reuters, 08 Nov. 2013. Web. 8 Nov. 2013.
4. Rudarakanchana, Nat. “Twitter To Launch On Thursday, In Hotly Anticipated IPO.” International Business Times. Ibtimes.com, 6 Nov. 2013. Web. 7 Nov. 2013.
6. Smarty, Ann. “Search Engine Journal.” Search Engine Journal. N.p., 7 Oct. 2008. Web. 9 Nov. 2013.
8. Goel, Vindu. “Ahead of I.P.O., Twitter Alters Feed to Add Images.” New York Times. N.p., 29 Oct. 2013. Web. 5 Nov. 2013.
10. “About Twitter.” Twitter About. N.p., n.d. Web. 5 Nov. 2013. <https://about.twitter.com/>