Twitter makes no money, and people who try the service don’t stick with it. Other than that, it’s a roaring success.
And it is, actually, if you measure success by raw numbers and cultural impact. From 50,000 users in 2007 to more than 1 million users in 2008 to more than 7 million users now, Twitter has caught on with remarkable speed.
It’s the current media darling among web services. Just in the last couple of months, we’ve seen reports of U.S. senators tweeting during the president’s State of the Union speech. Oprah signed up with great fanfare, and Ashton Kutcher raced CNN to see who could be the first to get a million followers.
But a Nielsen Online report released last week caused a furor among the Twitterati. Looking at the numbers, Nielsen determined that Twitter’s retention rate was about 40 percent — meaning that of the people who try the service in a given month, 60 percent don’t come back. The report quickly spawned a new demographic category: “Twitter quitters.”
Twitter’s retention rate of 40 percent is dramatically less than the social networks Facebook and MySpace, both of which retain about 70 percent of their new users. And according to Nielsen’s math, it means that Twitter will top out at about 10 percent market penetration.
“A high retention rate doesn’t guarantee a massive audience, but it is a prerequisite,” the report notes. “There simply aren’t enough new users to make up for defecting ones after a certain point.”
My view is that Twitter is changing from a personal service to a marketing channel. Twitter began as a cute tool that asked users to answer a question: “What are you doing?”
In the beginning, tweets were largely personal. But if my experience on Twitter (and I was one of the first million users) is any guide, the vast majority of tweets now are promoting something. Visit this website, try this product, use this coupon, read this article, come to this event.
There’s nothing wrong with that, but it’s not what the early Twitter was about. And it may explain why many people try Twitter and then leave it.
Still, I think Twitter is effective as a marketing tool. You may reach only 10 percent of the population, but it’s a very engaged and active 10 percent, and they’re people who love spreading the word about things that interest them.
Twitter itself seems to realize that it’s become more about business than pleasure. The company recently announced that it would soon begin offering commercial accounts, an enhanced version of Twitter that businesses would pay a fee to access. It’s a necessary step, as Twitter still exists on venture capital funding and hasn’t actually produced any revenue yet.
For Twitter fans who miss the simplicity of the early days, don’t worry. Some geek in a basement right now is probably putting the final touches on a new service that will be what Twitter once was — at least, until we marketers get our keyboards on it.