Twitter IPO – What It Means For You

Peter Roesler, President - Web Marketing Pros

By Peter Roesler

President, Web Marketing Pros

Twitter has always been one of the major player is on the social media scene, but it recently joined a more exclusive club when it took the step of becoming a publicly traded company. By joining the ranks of Facebook, LInkedIn, and Pinterest, Twitter now has a market valuation of more than $18 billion and the company was able to raise millions in capital for future growth and expansion. Besides being the third-largest U.S. IPO this year, it’s one of the largest tech IPOs worldwide in a decade. According to markets service Dealogic, Twitter becomes the second largest Internet IPO by an American company, behind Facebook. The launch of the Twitter IPO isn’t only significant to investors and economists. The effects of the newest tech stock will ripple to business owners, marketers, and the investment community.

Free from the technical glitches that marred Facebook’s Initial Public Offering (IPO), Twitter’s stock launched on November 7, 2013 to flurry of activity. From it’s opening price of $26, Twitter stock rose by 18.90 points to close at $44.90 a share, a gain of more than 72 percent.

Aside from the lack of technical issues, there were many other takeaways for companies who are on the same path to public ownership. For example, Twitter had significantly fewer users than Facebook did when they launched the IPO, this means there is less concern about market saturation. There was clearly room for Twitter to expand; Facebook on the other hand already had nearly 1/6 of the world’s population as users and has to work harder to bring in new users. Additionally, Facebook had a lot of employee stock that was locked up for a period of time which created more uncertainty for investors.

The successful launch of Twitter’s IPO may lead other tech companies to consider doing the same. The troublesome time that Facebook had following its marred launch led many companies to think twice. But now that it’s become clear that there is still a high demand for tech stock in the market, and that internet marketing and social media marketing will remain relevant for the foreseeable future, business owners are rethinking their own IPOs.

“The pricing underscores high expectations for a service whose revenue is expected to soar to $1.24 billion by 2015 and usher in a wave of consumer-tech public offerings,” wrote columnists Jon Swartz and Scott Martin in the USA Today. “Twitter could begat Dropbox, which could begat Box, which could begat Square, which … you get the idea.”

Most news about the Twitter IPO has focused on the financial aspects that concern investors, but it’s important for marketers to know how the move will affect their efforts. It will most likely be a mixed bag for social media marketers and business owners who use Twitter. As with all publicly traded companies, shareholders will want to see increases in Twitter’s revenue. This will lead to an increased focus on advertising revenue, as it did with Facebook. Marketers should expect to see Twitter more aggressively promote their paid marketing tools. As a positive, however, Twitter will most likely word harder to make targeting and advertising on the platform more efficient and effective.

Another side effect from the Twitter IPO that marketers should expect is increased competition for their target audiences on Twitter. Again, the need for increased revenue will lead Twitter to actively court businesses that aren’t already on the network, possibly with specials involving Twitter marketing services. Twitter already has many fine tools for reaching audiences such as Promoted Tweets, Promoted Accounts, Promoted Trends, and Pay Per Click Ads. Business owners will find themselves needing to take advantage of these tools more often when they want to generate the same amount of buzz on Twitter that they were in the past.

One of the concerns investors had about Twitter is how the network would expand to the groups of people and demographics that aren’t already on the network. Twitter will undoubtedly spend time trying to get new people to discover the platform and understand it’s appeal. Businesses that are already on Twitter can benefit from marketing push that Twitter will be making to gain new users. As people discover Twitter, marketers can use the platform to make sure people discover them (e.g. having a contest on Twitter, integrate Twitter feed onto site).

The launch of the Twitter IPO marks a milestone for social media networks and tech companies that will certainly be noticed by investors, entrepreneurs, and business owners. Taking time to learn lessons from the successful launch of Twitter can help expanding companies avoid the issues that plagued Facebook’s first year on the market.

It will take a while before marketers see how the Twitter IPO will change their marketing experience on the social network. As the successful launch of its IPO demonstrated, the executives at Twitter are no fools. Business owners and marketers can expect some pleasant changes and business-friendly improvements from Twitter and should be thinking of how they can use these changes to their marketing advantage.

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