Thursday, April 30, 2009

Nielsen, Twitter Quitters, and Why it Doesn't Matter

If you follow Twitter news, you're aware and have an opinion about Nielsen's recent report on Twitter's low retention of new users. Some Twitter fans are irate and believe the Nielsen data is incorrect; meanwhile, the Twitter haters are enjoying the "I told you so" opportunity. I'm not sure all the buzz about the study really amounts to much, except perhaps to call attention to how quickly many media outlets are eager to latch onto any whiff of negative news regarding Social Media.

The story begins two days ago, when David Martin, Vice President of Primary Research at Nielsen Online, authored "Twitter Quitters Post Roadblock to Long-Term Growth" on the Nielsen Wire blog. He shared an overview of a Nielsen study that found "the percentage of a given month’s users who come back the following month, is currently about 40 percent."

Many Twitter fans were quick to point out that Nielsen may have failed to account for the many people who use Twitter but never visit According to Tweetstats, 40% of Tweets come from people posting updates via third-party applications and sites. For many observers, this proved Nielsen's numbers were incorrect.

Of course, Nielsen was averse to having its accuracy questioned, so today Martin posted a follow-up on Nielsen Wire called "Update: Return of the Twitter Quitters." He says his organization has rerun the analysis "adding in more than 30 websites and applications that feed into the Twitter community" and found the retention number didn't change compared to the earlier report.

Given that Twitter's meteoric growth is well established, why should we care what Twitter's retention rate is? Because, according to Nielsen, the service cannot grow beyond a certain reach of Internet users with such low retention of new registrants. Nielsen calculates Twitter's maximum reach at 10%, a still formidable figure but nowhere near as large as many expect Twitter to attain.

Time will tell, but my feeling is that Nielsen may have gotten the data right while reaching an erroneous conclusion. Twitter's growth is undisputed, even (or especially) by Nielsen. The same organization that says Twitter loses 60% of new registrants each month also said that the site has seen its monthly unique audience grow 1382% from February 2008 to February 2009. By my calculations, for Twitter to have grown in a single year from 475,000 to over 7 million unique monthly visitors while shedding 60% of new users each month, it must have attracted around 16.4 million new visitors while losing 9.8 million of them.

While my calculations required quite a few assumptions to fill in for data not released by Nielsen, the basic contention is sound--Twitter's growth was already astounding, but for the site to have achieved this growth while retaining a mere 40% of its new users is mind blowing. This is also why I'm not really that concerned about Twitter's future. Nielsen seems to believe that a user that is lost to Twitter will stay lost, but is that a reasonable assumption?

It isn't hard to understand how 10 million people might have joined Twitter prior to its rise into the mainstream, failed to find many friends, and then abandoned the site within 30 days. But as more people are drawn to Twitter by Oprah, Ashton, Britney, Ellen, Demi, and Diddy, all of those neglected accounts are still waiting and available. In other words, the fact someone registered in June and left in July doesn't mean they won't ever return. In fact, my guess is that Twitter's growth this past year has been fueled in part by Nielsen's quitters who came back months later to rejoin the Twitterverse.

Twitter's problem isn't a lack of retention or reach but the opposite. I've already written on how once-popular sites have faded and how Twitter could, in fact, follow suit. Despite the Nielsen report that calls into question Twitter's stickiness, I still believe the service's primary challenge is establishing a business model that will be accepted by its fan base and investors.

So, if Twitter has grown impressively and continues to do so, what is with the almost joyous headlines about the Nielsen report? The LA Times says "Nielsen on Twitter: It's so five seconds ago." BusinessWeek says "Twitter is a Fad" and offers "it looks like it’s popularity may soon fade." And on PC World, a columnist writes, "Twitter has shown it is nothing more than a fad. Its services are limited, its fan base drops out quicker than a brick in a wet paper bag."

With Twitter so obviously still growing--and doing so exponentially--what would cause this sort of unfounded pessimism? First of all, it's clear many media outlets simply misinterpreted the Nielsen data. Nielsen isn't saying that Twitter is losing its audience; in fact, they've established Twitter's continued growth. Not only is there no evidence that "its fan base drops out quicker than a brick in a wet paper bag" but instead the facts show the site is continuing to skyrocket.

Maybe it's just jealousy. indicates Twitter has not only grown 10 to 20 times faster than the LA Times, PC World, and BusinessWeek sites in the past year, but it also now attracts double the unique audience of those long-established Web destinations.

In the end, this sort of coverage is an embarrassment for these media outlets. Whatever the cause, the failure to portray Twitter's real situation and the rush to pronounce it "a fad" says far more about the writers' bias than it does the facts. Articles like these remind me of the dot-com crash when those who'd said the Internet was a "flash in the pan" got their "I told you so" moment, but it didn't last long; soon the Internet came roaring back and forced the naysayers to get on board (or into early retirement).

Twitter will succeed or fail; other Web 2.0 sites will come and go; but there is no doubt about the future of Social Media. We are moving into a more networked, interconnected, and transparent world. It will happen, whether or not the reporters, columnists, and bloggers at mainstream media sites are ready for it.


Nancy Ramamurthi said...

I think (it seems like you) that nielsen was making a nice, provocative statement with their press release. While I disagree with what they imply (twitter doesn't offer much value for most...thus the "low" retention rate...) I do appreciate the discussion it has sparked.

I believe a more telling analysis would be to look at a detailed cohort analysis. Who joined, when, and what happened over time. Did they register, did they tweet, how often, how did the "following" stream evolve, and what drove all this.

Using a sample size of one (me...and I know I'm not a good proxy, so realize the dangers) it took me a couple of months to kind of figure twitter out or to be committed enough to give it a real "go." Many friends were in the same bucket. If you looked at my month over month retention (per nielsen), I would have likely been in the 60% of people who didn't come back the next month.

But...I came back in month 3 (not even 2) gave it another try, and now am hooked - I found my "purpose" on twitter and rapidly moved to tweetdeck, etc.

ultimately time will tell, but I am a strong believer in a simple to use, straightforward product that, in my case, is much better than an RSS reader. I follow those that interest me and get their thoughts and "pointers" real time (to their blogs, other articles, etc.). I see tons of potential in the future for how twitter can direct people to find/discover new information, people, and even things to buy. (admittedly, I feel like twitter is more of a broadcast than a "conversation" medium...but that could also be a reflection of how I use it)

I see some interesting ways, too, that site owners can take the best of twitter and apply it to their own products and help people find relevant information.

thanks for the post. good (& evolving) discussion.

Brandingdiva said...

I agree it's good the big media folks are paying attention and creating discussion.

I also agree about the negative comments from these media venues and some media bullies. What does it help to throw rocks at a young, emerging company. Sure they have not figured out the magic path to profits yet, but they have created something pretty cool that likely has a bright future. I'm sure they are hard at work on lots of growth, profits, value props.

Start ups are not like global brands with 1000's of teams to be perfect before you are three years old.

Like my thinking about eating out, everyone needs to a waiter or in food service first, before you pan the place.

Same applies, a reporter or media authority needs to have lived through a tech start up
before they only fling negative stories, and predict failure.