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Twitter IPO vs. Facebook IPO: Which is the Better Business?

It looks like Twitter is going IPO (Initial Public Offering), seeking to join the “big boys” of the Internet like Facebook, LinkedIn, Yelp, and Google as a public company. As someone who teaches social media online, I can’t say I can predict a stock price, but I do think that I can share some thoughts about the Twitter business and whether in the long-term Twitter is going to be as good of a business as Facebook.  Here are some thoughts on how Twitter stacks up as a business vs. similar social media competitors.

What Twitter is as a Marketing Engine

Twitter IPO vs. Facebook IPOTwitter, as used by people, is mainly about just a few things. First and foremost, news. People go to Twitter for breaking news, so if you are a politician, a non-profit engaged in timely tasks, or a political action committee, Twitter is incredibly important to you as a marketing engine. It’s where the political and news cognoscenti meet and greet, share gossip, and interact.  Twitter is incredibly important to politics: just look at Obama’s re-election campaign, or Occupy Wall Street or any other political mobilization group.

Marketing potential?  Pretty good: sell ads to campaigns and campaigns in the form of Twitter’s sponsored tweets.

Secondly, Twitter is really used heavily for coupons.  Sites like Juicy Couture or REI offer timely tips and insider deals for their most avid shoppers, and throw in the occasional useful coupon.  Twitter is a great “insider deal” website, sort of your Safeway Club Card on steroids.  Marketing potential: pretty good: cross-sell coupons to competitors, placing these sponsored tweets in the newsfeeds of people already signed up and paying attention to the Tweets of similar retailers.

Third, Twitter is used to connect with avid fans.  Pop stars like Katy Perry connect with avid fans on Twitter.  It works like this.  You buy one Katy Perry song on iTunes, you go to one concert, you hear about her one time… then that “one time” connection becomes a “long term” relationship, as Katy tweets her every thought to you and other avid fans via Twitter. Then, when it’s time for Katy to release her next album, download on iTunes or concert, she can tweet to you (and other avid) fans: HEY!  Buy my new (fill in the blank). So for companies or persons with an avid fan base, eager to follow their moves on a daily basis, Twitter is a useful tool. Marketing potential? Sell one group of avid fans on another person to follow (Hey Katy people, check out Miley Cyrus!)

Finally a big big use of Twitter is jokes. People use hashtags to share the stupid joke of the day, or the stupid trending topic.  People also use Twitter’s Vine video service to upload and share silly short videos.  This is probably the highest volume use of Twitter, and really the way I use it. I’m in line at Kaiser or the Post Office, and I open up my Android phone, log in to the Twitter app and read stupid humor across Twitter. Marketing potential?  Practically zero, but this is the largest volume play on Twitter.

Why Twitter isn’t as Good As Facebook (as a Company or a Stock)

Twitter is used heavily but in very niche ways.  In this order: jokes and stupid things (#1), celebrities and movie stars (#2), news and politics (#3), following great brands (a distant #4), coupons and insider deals (a very distant #5). Facebook, in contrast, is used by many people on a daily basis for photo sharing, keeping up with friends and family, school groups, following beloved brands for more than just coupons and on and on.  My daughter just finished High School and what was a very common use of Facebook was “study groups” either set up spontaneously by the students, or by the teacher.  Twitter has no such level of deep engagement.  So to compare them: Facebook is deep and wide (lots of uses, many people), whereas Twitter is deep and narrow (a few focused uses, not as many people).

Facebook also has lots of room to grow. Taking over local is one thing Facebook can do (sorry Yelp!  sorry Google+ local!), merging with Bing to become a mega search engine is another (Watch out Google!). Facebook has a dynamic, young motivated CEO in Mark Zuckerberg and I predict he will become the Steve Jobs of social media.  Young, motivated, talented, engaged.  Twitter’s founders have essentially left the building, while Google’s founders are off either chasing skirts or chasing bizarre ideas like glasses that connect to the Internet or Internet service from balloons. The focused, talented CEO will be the one who delivers – mark my words.

To any company, it matters a great deal who is the CEO and how motivated he or she is to succeed.  That in and of itself is a huge plus for Facebook, and a huge minus for Twitter (and for Google).

Parallel to this, I do many corporate workshops and trainings, and when I mention Twitter, inevitably there is a long groan from the audience.  Few “real people” in terms of small business marketers use Twitter on a daily basis, and even fewer love it. If you are in a Twitter niche (e.g., pop culture, jokes, politics, coupons, special insider deals), you may love Twitter, but outside of these niches people find Twitter a bit bizarre and a bit infantile.  Facebook, in contrast, is used by nearly everyone and most small business people “get” the concept of a Facebook (fan) page.  Facebook makes sense, and it’s pretty easy and robust to use.

Longer term, in my book, Facebook is going to be a much bigger business and really the true powerhouse of marketing on Social Media.  Sites like LinkedIn have a niche (business-to-business) that can be very lucrative, as can sites such as Yelp (local yellow page-type activity), but Twitter’s niches are very different.

The Twitter Hype Machine

What Twitter has done a great job at is: hype. Because of its popularity in pop culture (following the Katy Perry’s of the world), in politics, on news shows, on popular TV shows like American Idol and what not, it has ingrained itself into the culture as a significant force.  And that it certainly is. But beyond its niche uses, it is not clear how broad Twitter can become.  It may be great for certain brands (especially rock stars!) but for others (your average mom-and-pop business), not so much.

Twitter’s hype, I predict, will be its most challenging obstacle when it goes IPO.  Because once it becomes public, its books will be open and people will really scrutinize it like a business.  My money, in sum, is on Facebook.


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