Twitter reports $645m loss – what’s does the future hold?

According to a recent report mentioned in a BBC News article today ( Twitter has reported a net loss of $645m (£396m) for 2013. As you may have heard in November of last year, Twitter traded millions of shares on the New York Stock Exchange. Almost all of Twitter’s revenue – about 85% of it – comes from advertising on its site. Therefore, how has this loss happened in such a short time and what is the future for Twitter?

Twitter bird - Copyright Marisa Allegra Williams (@marisa) for Twitter, Inc.
Copyright Marisa Allegra Williams (@marisa) for Twitter, Inc.

Starting with the loss. Although most of it can be down to the initial Twitter fever inflating share prices, there is no doubt that it’s advertising models on the website have discouraged some users. ‏@kaikaikasa like many Twitter users is not happy with the way promoted Tweets are showing up from blocked users:

So could Twitter be hurting it’s users too much to increase market value? Timeline views fell nearly 7%, suggesting users were refreshing their feeds less often.

This brings us on to Twitter’s future. There is no doubt when Twitter started out, free from ads or product placements, users thrived on using the network. They got used to the simple way of communicating with each other. Developers made convenient apps for mobile and tablet devices, which meant they could integrate Twitter with their lifestyles on-the-go. Then came the so-called ‘improvements’ which gave seasoned networkers handy tools to chat but placed a learning curve on the less frequent user – look at how Facebook complicated their privacy options and affected all of their users! Changes like these need to be handled with care and rolled-out slowly, taking into account user feedback. At this point in Twitter’s life all appeared quite rosy, that is until users realised the network needs to make money in the form of advertising. Done carefully, the impact of ads within any social network can be minimal. However, when promoted tweets make users like Kite Voice (above) publicly angry, we must wonder how this is going to impact a social network if this sentiment continues.

Twitter appears to have started to hit a user-ceiling, averaging 241 million monthly users in the last quarter of the year, up just 3.8% on the previous quarter. The excitement around the network appears to be calming and now most of the globe has heard of the network, it’s time Twitter shows us what it’s really made of. Can gimmicks like custom timelines, and the ability to send and receive photos via direct messages really cut-it, when what users are really calling for are less intrusive adverts?

There is no doubt Twitter is still a big player in social networking but it will be interesting to watch it’s development over the next year to see what it can do to keep itself relevant, popular and profitable. I hope that users views are given a voice when it comes to how promoted Tweets and adverts affect them. Users understand the need for the service to make money but changing things too quickly and making adverts intrusive can damage the reputation, not only for users but for advertisers as well. Now is the time Twitter needs to mature it’s business model. It is still one of the best places for businesses to network and users to share discussions. I’d like to think in 10 years time this is still the case.

Please let us know your thoughts on this article via the comments or Tweeting @Design4Digital. If you need some help promoting your business via Twitter or Facebook, or even setting up a feed on your website, we’d love to help. Just get in contact with us.

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