Hunting for New Users

Yesterday Twitter announced that their user growth was flattening up. Needless to say, their share prices dropped. Now Twitter CEO says that his number one priority is to grow the user base. I think it is a great idea.

It is a great idea not only for Twitter, but also for Facebook, Google and other corporations, which provide services to connect people. If not today, in near future, their user growth is going to stall.

It seems there are not many ways you can make more money from this business model.

  1. Upsell your services to existing users (advertisers). In order to do this, dive deeper into peoples’ data and share it with advertisers.
  2. Create new users, who have enough buying power that attracts advertising revenue, while safe-guarding existing user base.

To upsell their services, they need to mine more personal data, which can also create more backlash in the form of user attrition and regulatory scrutities. So the trick is to mine more data without appearing to be endangering the perceived privacy, while providing more value per click to the advertisers. This, I think, is a game of diminishing returns.

Creating yet another billion users with enough buying power to attract advertisers is even harder. To achieve this, these corporations have to increase their market share. For Google and Facebook, that would mean creating a whole new market and then lay claim its majority stake, because they already enjoy near monopoly on the existing market. A company can grow as much as its industry, not an inch more.

Google and Facebook already realized this and have been working on this. Beyond philanthropical goals, projects like Google Loon, is ultimately aimed to connect the “unconnected” and thus to create new markets. Which is exactly what Facebook is trying to do in China.

If Twitter wants to grow their user base substantially, they might want to sail abroad too. Not an easy thing to do, especially for Twitter, which doesn’t provide many glitters in their services, but is defenitely worth the effort.