In 2014, as the hype and newness die down, social media is increasingly something we take for granted in our daily lives. There’s a big battle going on to keep our social attention: which of these two companies will prove dominant and win?
Twitter and Facebook: Competing or completely different?
Last week, Facebook founder & CEO Mark Zuckerberg used an earnings conference call to reaffirm Facebook’s grand vision, saying it was about “connecting everyone & improving the world through sharing.”
Twitter CEO Dick Costolo also talks a lot about how he sees Twitter as “the global town square.” On Twitter’s website, it states that its mission is “to give everyone the power to create and share ideas and information instantly, without barriers.”
Both visions overlap – they cater for “everyone” and are about opening up the world through sharing. However, a subtle difference in emphasis accounts for a lot of the differences in the role they play in our lives – Facebook talks about “connecting” whereas Twitter talks about “ideas and information.” I think this is ultimately what makes Facebook a true social network whereas Twitter is more of an information network.
Both connection and information play valuable roles, but over time, depending on the focus of our lives, we will ultimately favor one over the other in deciding where to focus our social attention.
In the below diagram, I’ve looked at the areas where Facebook and Twitter connect and inform us, where they overlap and fulfill similar roles, and also the areas where, segment-by-segment, new competitors are challenging them both.
So what are the key battlegrounds for Facebook and Twitter? I’m going to look at six of them and then declare an overall winner.
Battle for scale and user volume
This is quite an easy one to call today – Facebook has 1.23 billion active users compared to Twitter’s 232 million – over five times more. Further ahead, a challenge for both is what happens as user growth starts to slow down and settle, particularly in mature markets.
Once the preserve of millennials and college students, the fastest growing demographic on Facebook is now the 55-64 year age range. For young people, the prospect that their mum can see everything that they are posting and talking about with their friends is a serious risk to Facebook’s cool factor. In last quarter’s earnings call, CFO David Ebersman let slip that Facebook was “close to fully penetrated among teens” in North America, sending Facebook’s shares plunging. Many teens have flocked instead to instant photo-sharing app Snapchat, which Facebook recently tried (and failed) to acquire for a reported $ 3.5bn.
In January, a research study by Princeton University predicted that Facebook will lose 80 percent of its users by 2017, comparing its growth curve to that of an infectious disease.
Teens were not mentioned directly in last week’s conference call. Mark Zuckerberg did however say that, “Connecting everyone also means giving people the power to share different kinds of content with different groups of people. This is something we’ve focused on by building separate mobile apps beyond the main Facebook app. Messenger and Instagram are examples of this.”
Facebook’s huge critical mass means that it wins on overall user volume, but this comes with a health warning… Facebook’s size is also a problem for teenagers, who want a cool and exclusive social network where they can hang out with their mates. Facebook may have failed to acquire Snapchat, but it did acquire Instagram, and the teenagers who flick through it don’t necessarily realize they’re using a Facebook property. So for now, the combination of Instagram and new standalone apps keeps Facebook in the game.
Battle for real-time news attention
This is where Twitter excels. The reason that its status updates or “tweets” are restricted to just 140 characters is that it was originally conceived to add a social layer to SMS text messaging, before smartphones became widespread. While 140 characters might not be enough for long-form blog content, it does force users to be concise, and they can still link out to external websites and articles. Hashtags, like #Election, #Oscars, or #JustinBieber, help to categorize the information, determine what’s trending, and enables a dense and rapid-fire information flow.
Twitter is widely thought to have come of age during the Arab Spring and Occupy Wall Street movements of 2011, when protestors in the Middle East used it to share their movements and organize mass demonstrations. Even when the internet was restricted, they could tweet via SMS or even ‘call to tweet’. It puts regular citizens on the front-line of journalism. My colleagues at the BBC have told me that they now use Twitter as the primary source of breaking news stories, rather than more traditional news wire services such as Reuters or AFP. As Jayson Demers wrote in The Huffington Post, “Facebook’s most common use is to keep people informed of what’s happening. It’s become a scrapbooking site, where people archive important moments in their lives. Twitter focuses on speeding things up, often becoming a source in and of itself.”
Facebook has struggled by comparison. Due to its huge user numbers, if there’s a big event on, like the Oscars or the Super Bowl, you’re likely to hear what your friends and perhaps their friends are saying about it on Facebook, but you’re less likely to get the full range of views from across the whole of the world. Facebook tried to introduce hashtags last year to its status updates, but so far they have caught on to the same extent as in Twitter. It will be interesting to see if its Facebook’s Paper app, launched today, can do a better job of delivering a personalized newspaper experience.
By contrast, Twitter’s news feed can be rather raw and unfiltered, but that has actually proved an attraction for people wanting to follow celebrities and get an insight into their daily lives. Again, Facebook belatedly introduced fan pages that you could ‘like’, but whereas updates from musicians and film stars on Facebook can sometimes seem a bit scripted and the work of the PR department, on Twitter, there’s a direct interaction between celebrities that intrigues users, as well as a chance that a fan’s comments or @replies might get read directly and ‘retweeted’ by the celebrity.
“How many followers do you have on Twitter?” is still a question with social currency, and it’s telling that, with 49 million followers, both @KatyPerry and @JustinBieber have 8 million more followers than @Barack Obama.
Twitter wins here, as Facebook has been too slow to catch it up on real-time news.
Battle to connect us with our friends and family
Here Facebook has the edge – reflecting the emphasis of connection over information in its mission statement. Whereas you can follow anyone you like on Twitter – which results in a lot of one-way connections if they don’t follow you back – Facebook friend requests require mutual consent. This usually means that you end up with more ‘real’ connections of people you actually know.
As Diffen.com puts it:
Facebook is for connecting with the people you went to school with and Twitter is for people you wished you had gone to school with.
All those people you went to school with, however, don’t always make for the most exciting reading if you no longer actively keep in touch with them. Which brings me to one of Facebook’s biggest bugbears or virtues – depending on your point of view – the role of “passive communication.” The idea being that, once somebody’s accepted your friend request, you forevermore have a window on their life, broadcasted to you in daily chunks.
Authors Ed Keller and Brad Fay argued an opinion piece in USA Today that “Facebook can’t replace face-to-face conversation… the richest social gold mine is literally right under our noses: in the word-of-mouth conversations that happen in our kitchens and living rooms, next to the office water cooler, and on the sidelines of youth sporting events. These are the places where we actually live our lives.”
With its News Feed defaulting to your Top Stories, what Facebook has got much better at doing is filtering out the noise from those so-called “friends” it has calculated you’re less interested in, and giving you more from closer friends. Brands and people that you have “liked” are also now added to the mix and competing for your attention: many of them were up in arms last year when Facebook changed the rules so that (without paying to advertise), individual updates would only be broadcast to a small portion of their “fans.”
By contrast, Twitter default setting is “Most Recent,” and if you follow a lot of people, your News Feed can quickly degenerate into an unmanageable and unintelligible mess. You can organize users into lists of interest or topic area, but this feature has unfortunately been buried in recent updates to the site.
Given its ‘connection’ mission, it’s not surprising that Facebook has the edge when it comes to keeping in touch with friends and family, and filtering and curating what it thinks we want to see.
Battle for where we build and share our digital identity
Our profile page on our favored social network is a statement of who we are, what we’re about, and who we want to project to the outside world.
Both networks have similar tools to enable us to customize our page with profile pics, cover images and headline statements, which to a certain extent allow us to create carefully crafted and idealized versions of ourselves.
Facebook pushes us to use our real-world name and identity, and its controversial “Timeline” feature is quite literally a lifelong history of your every move on its network. On Twitter, less information is required to register, and we can be more anonymous if we so choose.
If Facebook is a bit like a digital scrapbook for our lives, where we share both the big and the small things with friends, Twitter is more like a digital soapbox, where we share our big and small views and ideas with the whole world.
Here, Twitter fills an interesting middle ground between Facebook and LinkedIn, which is more for purely professional talk. On Twitter, many professionals tweet on work-related topics and contribute to the relevant hashtags – hoping that they will build a following over time – whereas on Facebook such shop-talk might risk boring or alienating friends and family. Those wanting to craft such a professional or public identity on Facebook are forced to set up separate “Pages.”
However, as we switch from sharing words, to sharing photos and increasingly video, Facebook is better positioned. With the 140-character limit and text focus, photo-sharing is still something of a niche activity on Twitter. Many photography enthusiasts now flock to Facebook’s Instagram. Yet here, as the below graphic shows, this is where Facebook is now under attack from Snapchat, which in August 2013, equalled Facebook’s 46% share of daily photo uploads.
So we spend a lot of time creating our digital profiles and identities on these sites, and fleshing them out with shared updates. This links into another increasing trend – using our social networking account as a “digital passport,” that enables us to sign in to sites and applications across the net (rather than registering with an email address and password).
This is creating a growing ecosystem. At Le Web conference in 2012, Facebook’s Developer Network Director Ethan Beard said that 2 million sites had integrated “Facebook Connect” since its 2010 launch, with 250 million people using Facebook Connect on third-party sites every month. He said:
Facebook is the number one referrer of traffic to Spotify… What’s going on at Facebook right now is really, really exciting. We’re at the center of shaping and defining what the web and what the Internet is going to look like over the course of the next number of years … it’s a fun place to work.
You can increasingly ‘Sign In With Twitter’ on various websites (or indeed with your Google+ or LinkedIn account), although in terms of integration with other services, Facebook still has an edge.
Both Twitter and Facebook enable us to craft our digital identity and then turn that identity into our digital passport as we move and login to other apps other sites across the web.
People are using them both differently – who wins the battle for your social attention ultimately depends on whether you want that digital identity to be more of a public or a private one.
Battle for our mobile attention
Twitter’s simple 140-character message limit and SMS roots meant that, for a long time, it had the edge in mobile. It acquired or replicated the functionality of several early third-party apps that provided an enhanced Twitter experience on a smartphone, such as TweetDeck and Twitterific. It is possible for Twitter users to send each other direct messages or ‘DMs’ when they are both following each other, although this feature has been de-emphasized in recent years, in favor of a public dialog, and is also often subject to spam.
When Twitter filed to go public, in September 2013, it boasted that 65 percent of its ad revenue was already from mobile, versus 0 percent from Facebook at the time of its IPO in 2012. Facebook’s mobile efforts have been much slower – its first iPad app was delayed by nearly two years and it struggled to bring over the functionality of its much richer and more complex full-site design. By contrast, on traditional desktop PCs, for many, Facebook is the web – taking the place of old-style homepage portals like Yahoo and MSN, and replacing Google as the gateway to news and information. Its new Facebook Graph Search contains 1 trillion pieces of content – more than the index of any web search engine. Facebook also has its own app platform, home of social games such as Farmville.
However, as computing use switches from the desktop web to smartphones and tablets, Facebook is just one app among many in a world controlled by Apple and Google Android. In instant messaging, users have been attracted to cross-platform and cross-network messaging apps such as Viber and WhatsApp, which now has 430m monthly active users. From China, where both Facebook and Twitter are still blocked, Tencent’s WeChat has over 300m users, including over 100m international users.
Facebook is trying to make up the lost ground in mobile, and in last week’s earnings call said that 53% of its ad revenue had come from mobile, which at $ 1.25bn was nearly as large as the toal ad revenue in Q4 last year. In the latest issue of Bloomberg Businessweek, Mark Zuckerberg admitted that the shift to mobile was “not as quick as it should have been,” but, “one of the things that characterizes our company is that we are pretty strong-willed.”
Twitter’s short-messaging roots make it ideal for mobile, whereas Facebook has struggled to embed a ‘mobile-first’ culture. There are signs however that this is changing, and with Messenger, Paper and Instagram, Facebook is rolling out and beefing up a number of apps beyond its main ‘one size fits all’ mobile app.
Battle for leadership and profits
Facebook’s leadership has been strong and stable – Mark Zuckerberg deserves credit for keeping control of the company he founded, and he still owns 57 percent of Class B voting shares. In Sheryl Sandberg, he also has a respected and high-profile and COO, who has led some of the commercial efforts while Mark has been able to stay true to his programming roots.
This contrasts with lots of management drama at Twitter. The largest shareholder is Evan Williams, co-founder & former CEO, who owns 12% of the shares. Chairman Jack Dorseyowns 4.9 percent and current CEO Dick Costolo 1.6 percent. A former improvisational comic, Dick has been described as an ‘un-CEO’ who’s more focused on user growth than revenue. He has however steered Twitter through a very smooth IPO (in contrast to a rocky IPO for Facebook), and has gained a lot of traction for his “global town hall” vision for Twitter.
|As of Jan 28 2014:|
|Market Cap||$ 132.58bn||$ 33.05bn|
|Share price||$ 54.36||$ 59.53|
|Share price growth since initial public offering (IPO)||+42.42% from IPO on May 25 2012+14.49% since Twitter IPO Nov 8 2013||+32.76% since IPO on Nov 8 2013|
|Price/earnings ratio||54.36||-134.67 (still making a loss)|
|Share in global mobile ad market||15.8%||1.85%|
As the above financial table shows, Facebook is now profitable. Strong results last week from Facebook’s Q4 earnings saw the company beat analysts’ expectations, causing a 19 percent share price boost.
Twitter, on the other hand, is still losing money, with doubts about its monetization strategy, and relatively few advertising units on its website/apps. It will be interesting to see how markets react to Twitter’s Q4 financial results on Wednesday – figures from trading firm IG suggest that traders are currently biased 52 percent to the short side on Twitter stock.
So who wins the overall battle for our social attention?
So for most of us, Facebook is currently winning the battle for our social attention. Its sheer volume of users and the way that our account has become the “digital glue” and login across multiple services mean that it is unlikely to disappear anytime soon. However, a bit like Apple products (endless small enhancements to iPhones, iPads etc.), user excitement with Facebook has dimmed and people just take it for granted as an everyday part of life online. With the shift to smartphone and tablets, it is no longer enough to own the web.
Mark Zuckerberg shares this sense that Facebook is at a crunch point, saying “we’re really at this point where we can take a step back and think about the next big things that we want to do.”
There is a significant risk that Facebook loses the loyalty and attention of the teen and millennial audience, as they move on to the next cool thing. It risks becoming a bit of a “social everyman” – OK at everything, but not best in specialized areas such as real-time news and access to celebrities (Twitter), location-based services (Foursquare, Yelp and Google Maps), photos (Instagram & Pinterest) and messaging (Snapchat, WhatsApp and WeChat).
As Keith Rabois, partner at Silicon Valley venture capital firm Khosla Ventures said, “No one individually has quite yet displaced Facebook. But as more and more people choose another social platform as their primary hub, it’s a real problem. They could be losing one segment at a time.”
For now, what that means is that many of us will probably continue to use a bucket of different apps and social platforms. And as the most promising apps are acquired by the bigger players, that bucket will consolidate over time.
Overall, who gets our social attention comes down to what we value the most – connection or information? The ultimate social network might find a way to be brilliant at both. In the information and ideas bucket, Twitter is better than anyone, and I believe that it will continue to have an important role to play. Yet, as it broadens its role in the social media world, Facebook looks better set to remain our dominant friend.