Twitter dives as Facebook continues to thrive

Facebook continues to defy expectations with incredible growth in virtually every important area of business success, and its accomplishments stand in stark contrast to Twitter's decidedly tepid performance.

Facebook and Twitter, the pioneers of social media, aren't even in the same league anymore. The two companies' performance and outlook could not be more different: Twitter continues to stall out, while Facebook keeps pushing into higher gear.

This week's Twitter and Facebook first quarter 2016 earnings reports indicate the gap between companies is widening. Facebook's net income nearly tripled year over year to $1.51 billion; revenue jumped 65 percent to $5.38 billion; and mobile represented 82 percent of all ad revenue during the first quarter. And despite having a monthly active user (MAU) base that's three times larger than Twitter's in the United States, Facebook added 12 million U.S. users during the last year. Twitter effectively added none.

Facebook also commands more of people's attention. "Today, people around the world spend on average more than 50 minutes a day using Facebook, Instagram and Messenger, and that doesn't even include WhatsApp yet," said CEO Mark Zuckerberg during the company's earnings call.

Twitter's first quarter results weren't a complete bust, but the company lacked the growth and execution that make Facebook the powerhouse it is today. Twitter's revenue increased by 36 percent to $595 million; the company added 5 million users; and it cut its losses in half on year over year. However, Twitter hasn't seen a profitable quarter in more than a decade.

Facebook ended the first quarter of 2016 with 1.65 billion total MAUs, and Twitter reported 310 million total MAUs. Despite Facebook's massive size, it still managed to add 60 million users, while Twitter mustered only 5 million MAUs, or roughly 8 percent of the users Facebook added during the quarter.

Why Facebook continues to outpace Twitter

Some of Twitter's most significant problems have been apparent since its early years, and they continue to dog the company today, according to Brian Blau, research director at Gartner. "[Twitter] did not execute on the business as well as Facebook did, even if you were to compare them during the same time of growth."

Facebook did a better job of understanding the social context for consumers, while Twitter suffered stumbles, false starts and executive turnover, Blau says. "Facebook is a more ubiquitous type of a service — long form, person-to-person social communications. That's what it's set up for," he says. "Twitter isn't, it's meant to be short form."

Many people are still uncomfortable with Twitter's short, public conversations, and that holds the company back, according to Blau. "If you participate in Twitter's conversation you are part of that news," Blau says. "There are people that are just not accustomed to having that very public persona — they don't know what to do in that realm."

Twitter was wise to make tweets its core value proposition, according to Blau, but he expects the company to follow Facebook's lead by expanding the short messages into a more immersive and engaging format. "[Twitter] hasn't figured out how to properly churn the business" and reinvent its platform to meet the market's demand for constant change, Blau says. "The real problem, to be honest, is their track record and their inability to execute based on that track record. They haven't proven themselves in the way that other companies have, given that there's a similar appetite for these services."

Twitter has some good fundamentals, as proven by its ad business, but it has yet to provide a mechanism or clear strategy for growth, according to Blau. Meanwhile, Facebook continues to build upon its proven formula. "Despite all of the pseudo issues they've had, their Achilles heels, people screaming at them because they're not doing the right thing, [Facebook has] done just fine."

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Matt Kapko

CIO (US)
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