Advertisers are sending a message to Twitter about its IPO plan announced on Thursday, “218 million people isn't a big enough audience.”
The social networking site confirmed September on a tweet the submission a form in Securities and Exchange Commission (SEC) for its planned initial public offering. Some investors got excited about the company opening it to the public. One of them was Kevin Hartz, CEO of start-up Eventbrite, who has invested in other successful start-ups including PayPal, Pinterest and Airbnb.
He said "This is one of those exciting moments in the Valley. It's just a financing event for Twitter, but it does demonstrate the next step in the life of what is an emerging Internet giant."
However, this was not the same reaction advertisers had after hearing the details of the IPO as reported by the Wall Street Journal. They believe that “218 million people isn’t a big enough audience.”
One of the problems analysts see with Twitter is that there are more people talking about it than those using it. The population of users the company has is so much fewer than that of Facebook which has 1.15 billion active users.
According to Forrester Research, 22 percent of Internet users have Twitter while Facebook has 72 percent. This is another problem because Twitter may struggle with its plan to raise $1 billion through IPO. The company revenue from ad for 2012 is only $317 million while Facebook earned $4.3 billion.
The number of new users joining Twitter has also slowed down. It only has a seven percent growth from the previous quarter compared to earlier quarters which have 10 and 11 percent.
Analysts recommend Twitter to make the site more user-friendly after feedback that the site is difficult to use and time-consuming as users need to follow and get people to follow them to be socially visible and connected.
The "focus needs to be on making the service useful and relevant to the masses," said Vik Kathuria, managing partner at MediaCom, to the Wall Street Journal. "They need to find ways to connect with the masses to increase engagement so it's not a small minority who remain the power users.”
