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Let’s play Twitter Acquisition Roulette
by Olivier Blanchard | September 30, 2016
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Who will buy Twitter? That has been a popular question lately. Tech industry observers and business analysts have been scratching their heads, wishing they (we) had a working crystal ball to peer into the future. Rumors and speculation have been drifting into our content feeds for weeks now, with big names getting tossed into the ring: Google, Disney, Salesforce, Microsoft, and so on.

So who will buy Twitter?

First, let me start by saying that I have no idea. On the one hand, I don’t have any inside information about offers or negotiations or behind-the-curtain discussions. On the other, what foresight I occasionally enjoy is neither a superpower nor a magic trick. It is based on a combination of trending, probability and a knack for spotting outliers and making educated guesses as to what their impact on x is likely to be. But that doesn’t mean we can’t do a little digging and thinking, and come up with some educated guesses. In that spirit, today’s exercise is going to be really simple: 1) We are going to look at why Twitter might be an attractive acquisition, and 2) we are going to very briefly jot down why a few possible buyers might be interested in acquiring Twitter. I won’t make any predictions, but let’s see where we end up.

Twitter by the numbers (sort of):

First things first: Some numbers about Twitter. (Some may be rounded up or rounded down, so there’s no need to share more precise numbers in the comment section. This is just an exercise, not a quarterly report.) Let’s start with some raw reach numbers:

  • Active users: About 300 million worldwide.
  • Monthly active users (MAU) in the US: About 66 million
  • Total users: (active and inactive) Roughly 1.3 billion.
  • US Social Media users who use Twitter: Roughly 1/3.

Note that Twitter’s active user growth has been fairly flat since Q1 2015. Not strictly flat, but flat-ish. This isn’t to say that the social network isn’t attracting new users. It just means that it isn’t attracting enough new users and retaining enough existing users to maintain the kind of positive MAU trending it enjoyed pre-2015. Below is a chart showing some more general demographic information:

2015-08-19_social-media-update_11

Let’s talk about Millennials for a minute. How do they like Twitter?

  • 80% of Millennial Twitter users report accessing Twitter with their smartphone at least 1x per day.
  • 15% of Millennial Twitter users report accessing Twitter with their smartphone 10x per day.
  • 79% of Millennial Twitter users report that live-tweeting an event makes it more enjoyable.
  • 69% of Millennial Twitter users report that they would follow a hashtag during an event.
  • Roughly 40% of US Millennials have a Twitter account.

What about teens? Here’s a little visual story of where teens fall when it comes to Twitter usage and perceptions. (It’s a moving target.)

2016-09-30

2016-09-30-1

2016-09-30-2

In spite of what those three charts show, Twitter is far from dead when it comes to teens. Snap(chat) and Instagram are more popular, but Twitter still manages to capture the interest of 15-20% of teens, and that isn’t bad, especially compared to other “traditional” media channels. It’s enough of a beachhead to build something on.

What about other numbers we should be aware of? One number catches my eye:

  • Twitter’s projected advertising revenue for 2017 is $3.2 billion.

Other observations:

For every business that is looking into acquiring Twitter, remember that…

  • Twitter is a mobile play.
  • Twitter is a big data play.
  • Which means that Twitter may also be a significant AI play.
  • Twitter is a content and media play.
  • Twitter is a consumer and audience engagement play.
  • Twitter is an advertising revenue play.

Now let’s play Twitter Roulette. Here are your options:

The rules are simple. I am going to list a number of companies that are possible buyers, then briefly point out why that would be a good (or bad) idea, and let the chips fall wherever they will.

Disney: I didn’t spend all this time talking about millennials and teenagers for no reason. Imagine that you’re Disney. Media and content-wise, you are looking for ways to reach your audience, grow your audience, and engage with your audience. Twitter could help Disney scale that. Disney could also use Twitter to distribute its content, not just point to it. That means Twitter could become a mobile live-streaming video play, a gaming play, and even a VR/AR play for Disney. Note that Disney isn’t just the Disney brand. It’s also ABC’s large family of networks, A&E, ESPN, Pixar, Lucasfilm (the Star Wars universe), and Hulu. This means that Twitter’s newsfeed plays well in that ecosystem. In addition, Twitter could provide an entirely new universe of feedback and service possibilities for Disney’s experience layer at its theme parks and properties. Twitter could also help provide a springboard for Snapchat-like features and capabilities to lure teens back once Instagram and Snap become uncool, which is bound to happen at some point. Lots and lots of cool possibilities here.

Salesforce: The software giant could definitely find ways of tying Twitter into some of its products. Twitter has always been a shoe-in for LoB funtions like market intelligence, customer support, and word-of-mouth marketing, so it would be an interesting addition to Salesforce’s expanding ecosystem. Especially given how much Salesforce is banking on AI (think natural language analysis, text automation, and deep learning), and how well that would play with Twitter. (Oh, and it’s a mobile play.)

Google: Twitter as a search layer. Trend analysis. Behavioral analysis. Advertising. You noticed that thing about millennials loving hashtags and live-tweeting events, right? Think second-screen experiences and audience amplification. Huge advertising play there. There’s an AI play in there too, eventually. There’s a lot that Google could do with Twitter. My worry is that Google tends to ruin every social media product they touch, so… I have some reservations about where Google would take Twitter. Google is good at Google. It isn’t always great at other things.

Microsoft: Microsoft’s established ecosystem of business applications and its push into the world of AI-enhanced productivity make grabbing Twitter interesting. Lots of data to play with there, and great services to be built around all of that chatter, reach, engagement and feedback. Integration wouldn’t be super obvious at first, but I can see a lot of interesting synergies there. Also, a Twitter integration with LinkedIn could be a fun ride, at least from the sidelines. The advertising revenue from Twitter wouldn’t be terrible either. (Oh, and it’s a mobile play.)

Amazon: Search, social sales funnel, media, content, advertising… It would be really interesting to see how Amazon might leverage Twitter to expand its business. So many possibilities here. Imagine Echo and Twitter playing together. Think about how Twitter might also fit into Amazon’s video and live-streaming ambitions. Twitter could be a natural next step following Amazon’s acquisition of Twitch back in 2014, and how well Amazon’s in-house version of Netflix is doing. (Oh, and it’s a mobile play.)

Apple: Why not? Apple can afford it, and there’s a lot it could do with Twitter: Its newsfeed, advertising, live-streaming, content distribution… I won’t really hold my breath here, and I don’t think Apple understands social enough to make a Twitter acquisition work, but I didn’t want to completely dismiss the possibility. Someone at Apple might have a genius idea for Twitter that none of us has thought of yet that transcends obstacles we know the company would have in regards to this kind of play.

Facebook: Newsfeed, live video, trending topics, and total social media domination (remember that Facebook also owns Instagram). Three of those are problems that Facebook can’t seem to be able to fix on its own, and the fourth would be a nice touch. Is it worth $20B though? If you’re Mark Zuckerberg, maybe, yeah.

Verizon: 1. Verizon is probably looking for a win after its expensive and not particularly fruitful acquisition of Yahoo and AOL. 2. Advertising, advertising, advertising. 3. Twitter’s newsfeed. 4. Combining AOL, Yahoo and Twitter could lead to a sort of FrankenGoogle product, which sounds bad but could eventually grow into something valuable against Google. (It would just need better branding, obviously.) Did I mention advertising? 5. Live-streaming. media, and content distribution. I am not as excited about a Verizon-owned Twitter as some, but it wouldn’t be terrible.

Comcast: A lot of what I explained about Disney also applies to Comcast (which owns NBC Universal and Dreamworks). The short version: Content and media distribution, Twitter’s newsfeed, advertising, audience engagement, social amplification (Oh, and it’s a mobile play.)

All that’s left to do now is wait until someone starts spinning that wheel.

In case you are wondering, my top (favorite) picks are Disney, Salesforce and Microsoft, but I am definitely keeping an eye on Amazon and Facebook.

Feel free to comment or throw other companies into the ring if you have an interesting theory.

Cheers,

Olivier

 

Sources: Pew Research CenterDMR, Statista, Fortune.

About the Author

Olivier Blanchard has extensive experience managing product innovation, technology adoption, digital integration, and change management for industry leaders in the B2B, B2C, B2G sectors, and the IT channel. His passion is helping decision-makers and their organizations understand the many risks and opportunities of technology-driven disruption, and leverage innovation to build stronger, better, more competitive companies.  Read Full Bio.