Twitter’s strategy: a ‘systems thinking’ analysis

Twitter’s future has received a lot of press in recent times. From its convoluted ‘strategy statement’ released late last year to acquisition rumours ,with Google as an acquirer, this year. What is going on with this social media platform which currently has over 288M monthly active users, 500M tweets per day and a market cap of +$30bn? The answer may lie in an analysis of the system Twitter inhabits and the changing influence it has this system.

The history of Twitter is similar to other social/search sites like Facebook and Google in that it was built for web but has matured into a mobile product making use of contextual and ‘real time’ functions like geo-location, messaging and ‘Live Events’. But it’s move into mobile wasn’t on its own. In fact, many 3rd-party developer apps (e.g. Twitteriffic, Tweetdeck, Tweetbot, Tweetie) set up as mobile Twitter clients shortly after the iPhone launch bringing the web experience to mobile and pioneering functionality that Twitter would later use on its own mobile platform. It is worth analysing this point – the interplay between 3rd party apps, mobile and Twitter – using a ‘systems thinking’ approach to shed light on what could be the future strategic direction of Twitter and potentially other social media properties.

What is ‘systems thinking’?

Simply put – it is the understanding of how things (objects, animals, businesses etc.), as parts of a system, influence one another within a whole. A good example is understanding an eco-system like a rainforest by analysing the plants, birds, bugs, weather etc. in the forest and how they influence each other. In business, it is akin to understanding the value chain, the actors in it and the influence they have on one another as they aspire to create value. For Twitter, the core ‘parts of the system’ (social media advertising) are businesses and consumers, social media platforms, 3rd party developers, advertisers and content 

The Twitter system: Once open – now closed

As outlined above, Twitter’s move to mobile was on the back of creations by 3rd-party developers. Since then however, the pressure to monetise and create shareholder value (post IPO) from its platform has led to a strategy of closing out parts of the system. There are 4 events that show this:

  1. In 2010 Twitter launched promoted tweets on its platform as a way to monetise. This is not dissimilar to other social media profit models that use advertising in the main social feed to attract users to products.
  2. To succeed in advertising it restricted 3rd- party apps (the same ones that had led it to mobile) to 100k user tokens which limited their ability grow and to control Twitter content in their apps, thus growing the propriety properties.
  3. Acquisition of MoPub in 2013 which is a hosted ad-serving business for mobile publishes. Its functionality allows app developers to serve up targeted advertising across mobile applications.
  4. Cutting off Meerkat: During SXSW last month, Meerkat a ‘one to many’ streaming video application launched which used Twitter APIs to promote live streams to your Twitter followers. Twitter had recently acquire Periscope (a similar offering to Meerkat) – justifiable in that sense but another sign to 3rd-party apps that Twitter wants to protect its 3rd-party platform – keeping engagement (and revenue) local.

These events are logical given the pressure to monetise but it is possible to think of an alternate outcome for this system – one that is more open to other parts and for which Twitter could potentially generate significant longer term value.

An alternate Twitter system: Once closed – now open

Twitter like other social media platforms has a privileged asset – a unique understanding about its users’ identity (e.g. @petecorbett). It knows what users like and what their interests are by analysing who they follow and what they tweet about and this is powerful (Facebook only knows ‘who you are and who you know’ and Google knows ‘what you are searching for and when’). 

Therefore, the thing that makes Twitter the company valuable in its system is not the features on the Twitter platform, the app or anything to do with the digital product (e.g. the 140 characters, #, @usernames) – rather, it is the knowledge of its user base. More specifically, it is the Twitter identities and the understanding that can be gleaned from how those identities are used and how they interact that matters.

With this understanding (Twitter’s value is its users’ ‘interest graph’ and not the functionality and ability to monetise on its platform) it could play to win with a much more open approach to its system:

  1. Make the Twitter Identity central: The choice to increase advertising on the Twitter timeline should be replaced by ensuring as many people as possible have and use a Twitter identity (on the Twitter app or on 3rd party-apps).
  2. Open the identities up to 3rd parties to get people to build out their Twitter identity: 3rd-parties should build all kinds of apps that have a need to connect people with common interests, publishers would be an obvious candidate and maybe even an app that streams live video or allows people to share podcasts, live music – just about anything to get more people using the Twitter identity and building their interests related to their profile.
  3. Serve up advertising on 3rd-party platforms: Utilising Twitter’s MoPub business, serve up advertising off the Twitter platform, thus making Twitter ‘cleaner’ and increasing scope and scale for new types of monetisation.

An approach like this is analgous to other platforms like Uber and Airbnb. Twitter could, if it chooses a different strategy in its system, be the world’s largest social media advertiser…with no advertising on its platform.

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