EcommGroupprojectMegMarkKris

Twitter Lightning: An Opportune Moment?
Megan Bradfield, Kris Hodgson, Mark Malowany
MACT, Faculty of Extension, University of Alberta
August 30, 2015 
COMM 550: Intro to Electronic Commerce

RUNNING HEAD: TWITTER LIGHTNING 2
Introduction
The popular social networking site, Twitter, was originally developed in 2006 as a simple
interface to share personal, text-based updates with friends through mobile phones. Years later,
Twitter is an award-winning, highly addictive 140-character micro blogging platform that
became a publicly traded company in 2014 (Piskorski et al, 2014). Today, Twitter is having a
hard time retaining its market advantage. So, to innovate, Twitter announced its newest product
in June 2015: Twitter Lightning. Lightning is an interface that will allow users to leave their
traditional Twitter timeline in exchange for curated images, videos and text surrounding specific
news or events within a more immersive, full-screen, content-focused user experience (McAlone,
2015). Interestingly, Lightning allows both Twitter subscribers and non-users to see timelines
and all information about events from inception to completion.
This paper explores the market space opportunity that Twitter has identified with its
impending project Lightning and establishes why Twitter perceives this as an opportunity. Using
a “Framework for Market Opportunity Analysis,” we provide our recommendation for why
Twitter should or should not proceed with this new platform.
Addressing the Market Opportunity
Twitter serves both business-to-business and business-to-consumer sectors: Individuals and
companies use Twitter to share, market and analyze content. Twitter’s value system is its web of
suppliers, partners, and customers who create raw content value in the form of informational
tweets, advertising content, and tools that help optimize user experience. Currently, Twitter
offers three advertising methods to generate revenue and supply value to advertisers: Promoted
Tweets, Promoted Trends, and Promoted Accounts, all of which work on mobile devices and
focus primarily on text-based calls to action (Laudon & Traver, 2015).

Twitter’s latest quarterly earnings statement tells two important stories that define the
company. On one hand, Twitter delivered unexpectedly strong revenue, primarily based on
advertising—it has proven itself to be a desirable platform that matches an audience with
advertisers. On the other hand, growth in new users has stalled and engagement of existing users
has weakened (Goel, 2015). Twitter has the dual motivations of providing a better experience to
existing users to unlock trapped value, while striving to radically engage mass audiences and
create new-to-the-world value offerings. Lightning is set to help Twitter enhance advertiser
interest by complementing existing advertising options, while also being a fun and useful tool to
help serve existing users and attract new audiences.
Discovering Underserved and Unmet Needs
Focusing on Twitter’s value proposition will help to understand how Twitter is, or is not,
meeting customer needs. In broad strokes, Twitter’s customers are advertisers and these clients
want access to segmented and receptive audiences. Twitter’s job is to cultivate such an audience
by attracting users and offering an efficient way to track and describe their activity.
While Twitter active users may be 316 million, over a billion accounts have been created,
so many remain dormant (Sacca, 2015). This suggests an available and underserved audience of
casual, relatively inactive users. Lightning represents an opportunity to re-engage this audience.
To discover unmet needs, one should ask the questions: What is the valuable gift Twitter
offers to the public and can this be improved? How does Twitter fulfill the needs of customers
that other firms cannot and is Twitter retaining this value by offering custom products for lesser
costs, while providing easy-to-use services?
In essence, Twitter provides a community-building platform for people to communicate,
share, curate, and receive information about topics meeting their interest without being hindered

by geographical or time-based constraints (Laudon & Traver, 2015). Twitter is an amazing tool
for finding breaking news and information trends but, because there are hundreds of millions of
tweets every day (http://www.internetlivestats.com/twitter-statistics/), it is difficult to cut through
the noise to find relevant information. There are little barriers to register with Twitter, yet the
platform is consistently perceived as difficult to use and third-party providers aggressively
compete with Twitter’s in-house tweet management and analytics services (Piskorski et al, 2014).
In order to maximize its value proposition to customers and meet their underserved needs,
Twitter must focus on ease of use and connecting with users. To date, Twitter has adopted a
hashtag method to stream and catalogue conversations at events via a keyword or phrase prefixed
by a pound “#” character, which has worked well for its core audience. But Twitter needs to
move beyond the hashtag to extend its core audience and bring the Twitter experience to a
significantly larger audience, realizing its full potential to users and advertisers as the ultimate
tool for communicating, following, marketing and sorting event information; easily and in real-
time.
Enter Twitter Lightning, a new feature that will allow users and non-Twitter users to view
video, images, and news surrounding events. Journalist Matilda James (2015) says Lightning is
“an attempt to enhance the user experience” by organizing event tweets and allowing users to see
all information, regardless of whether or not the users follow each other. Also, Lightning allows
larger photos to be shared, which increases engagement rates regardless of whether or not a user
is logged in. Furthermore, Lightning may help Twitter reach new audiences and grow its
membership for it is targeted to “work in tandem with TV networks” because “live content has
lately become a crucial source of revenue generation for media companies” (James, 2015).

Target Customers and Users
Twitter’s target customers are digital marketers of the display ads and social marketing
segments. As of 2015, ad revenue accounted for about 90% of Twitter’s total with the rest
coming from data reselling (Twitter, 2015). This is an attractive area to be in as online
advertising is a growth area, for online advertising spending outpaced broadcast TV for the first
time ever in 2014 (Hof, 2014). Mobile space advertising shows additional, explosive growth and
opportunity.
Project Lightning is positioned to better serve marketing clients by increasing Twitter’s
usage rate, providing superior event-driven marketing opportunities, and generating broader and
richer psychographics for resale. This strategy aims to help Twitter differentiate itself and remain
competitive amidst other social media platforms.
To succeed, Twitter must provide a superior, compelling product: Twitter users. The market
for advertising and data reselling is increasingly competitive and Facebook trumps Twitter in two
key areas: the amount of active users and the rich set of demographics to facilitate advertising
and marketing segmentation. Project Lightning will address both of these shortcomings.
Usage Rate. Facebook has over 1.49 billion active users
(http://newsroom.fb.com/company-info) and Twitter, 316 million
(https://about.twitter.com/company): Therefore, Facebook provides a more expansive canvas for
marketers to draw from.
Twitter Lightning provides an opportunity to re-engage casual and lapsed Twitter users to
immediately and vastly increase its usage rate, by building opportunities for logged-off and non-
registered users to participate.

Demographics vs. Psychographics. The personal nature of Facebook provides a trove of
demographic data to exploit, with which Twitter cannot compete. The event-driven nature of
Twitter (further accentuated in Lightning) promises to provide rich psychographics, a
complementary demographic description that focuses on activity, interest, opinion (AIOs),
attitudes, values, and behaviour (“Psychographic”, 2015). Facebook excels at the personal, the
‘who,’ whereas Twitter’s foundation is event and opinion—a vast, differentiated pool of
psychographics to exploit.
Summary. Twitter is not reinventing the wheel with Lightning. It continues to target
advertising and marketing clients in the social networking space in order to monetize the service.
This is sound strategy, as spending for online advertising is increasing. Twitter Lightning
promises to tap into the growing area of online marketing by targeting casual-users, non-users
and more fully exploiting second screens and mobile devices.
Resource Requirements
For Lightning to succeed it will require the following ecosystem: a) backend technology;
b) frontend design; c) partnerships; d) editorial (curation) staff; and e) audience.
Backend Technology. The backend consists of two components. First, the basic Twitter
engine. This mechanism delivers Tweets, provides user engagement (comments, likes, retweets),
and tracks analytics. This existing technology is tried, tested, and proven to scale. The second
backend technology is the software to curate Tweets. In some ways this is a departure from the
Twitter experience. Twitter is primarily designed to be a ‘firehose’ of data and Lightning is
attempting to capture and showcase moments in the stream. Twitter currently has curator
software designed for businesses to discover and showcase conversations

(https://curator.twitter.com). This seems to demonstrate capability to curate content, though it is
uncertain how it scales.
Frontend Design. The frontend includes the look, feel and user experience. Twitter can be a
confusing place for newcomers. As billionaire Twitter investor Chris Sacca (2015) points out,
Twitter can be hard to use, scary, and lonely and the front-end design should directly confront
those obstacles. But, to date, Twitter has been consistently challenged at providing compelling
user experiences with mass appeal.
Partnerships. Lightning will be event driven, targeted at corporate partnerships to define
‘moments.’ Twitter has a proven track record of media partnerships to provide such moments of
shared content (i.e. Amplify; https://biz.twitter.com/twitter-amplify).
Editorial Staff. This is perhaps the single biggest departure from Twitter and unknown
variable for Lightning. Curating content is a profoundly human endeavour. While much of
Lightning is bringing together existing elements with the Twitter ecosystem, this is the wild card
element. It is labour intensive and the specific resource requirements are unclear.
Audience. For Lightning to work, an audience must be in place to participate. Twitter is in
the enviable position of having near ubiquitous name recognition, even if it is only being actively
used by a fraction of that audience. Twitter can leverage this awareness into action.
Financial, Competitive, and Technology Opportunities
Twitter has a sizeable, active core following. Tinkering with their fairly successful formula
poses a risk of alienating the installed base. This risk might be deemed acceptable if reward is
suitably compelling. In light of this, how attractive an opportunity is Twitter Lightning?
Financial Opportunity. Lightning has the potential to shore up existing advertising revenue
and tap new money coming into the online realm. Total industry advertising spending in the US

is estimated to be $187 billion for 2015 (Lunden, 2015) with online ads accounting for nearly one
third of that.
Digital ad spending is increasing, predicted to double by 2019 to match or surpass TV +
Cable revenue (Peterson, 2014). Twitter Lightning has the opportunity to gain a bigger piece of
this market. Interestingly, the event-driven nature and mass audience of Twitter Lightning shows
great synergy with TV, forming an end-to-end strategy in the advertising funnel by coupling the
broadcast nature of TV targeting brand (awareness) with digital follow through on lead
generation and action.
Competitive Opportunity. Facebook is a social networking behemoth via overall usage and
personal sharing, but Twitter has a competitive advantage in the public sphere through its events-
based sharing. This must be protected and extended or Twitter risks squandering it all. Twitter
Lightning is predicated on the idea that people want to participate in mass events online.
Twitter’s current advantage is to be the place where celebrities and newsmakers congregate and
interact with the public. In this sense, it is ‘the place to be.’ Twitter has the opportunity to put a
lock on being the de facto public space of the Internet.
Technology Opportunity. Twitter has most back-end technology components in place to
integrate Lightning’s elements into a coherent, marketable product. Yet, Twitter is criticized as
being confusing to newcomers, so Lightning’s development presents an opportunity to improve
the front-end, fulfill user expectations, and improve retention. In short, it is an opportunity to
rationalize disparate technologies and deliver a coherent product.
Further, this is an opportunity to exploit mobile technology to collect insightful data from a
larger pool of logged-off users. Mobile devices are inherently personal and the tracking of device
ID makes it possible to build meaningful psychographic profiles from otherwise anonymous

input. Twitter’s strong position in mobile provides revenue growth potential for Twitter’s data
reselling arm.
Porter’s Five Forces Analysis
In an increasingly tight digital advertising market, competing forces make profitability a
challenging proposition. Our analysis of Porter’s five forces will show that, through competition
for digital advertising dollars, Lightning aims to claim a distinct and lucrative niche designed to:
1) reduce supplier power by increasing usage and content generation; 2) reduce buyer power by
increasing the value proposition of Twitter ads; 3) reduce the threat of substitutes through
product differentiation; and 4) reduce the threat of new entrants by dominating the space.
Bargaining power of suppliers. Suppliers are the players (corporate and organic) who create
content that actively engages users: this stream of content provides the backdrop to sell
advertising. Here, suppliers have power via mobility across social networks. If players are
choosing to participate in Facebook or Snapchat, this reduces Twitter’s ability to generate profit.
Twitter Lightning is designed to increase the available pool of users and increase their
engagement, both of which reduce supplier power. A large pool of engaged users increases
Twitter’s ability to generate profit.
Bargaining power of buyers. Buyers are users who purchase promoted tweets, trends and
accounts. Buyers may choose other social networks to advertise on, but many turn to Twitter
because of the minute-by-minute engagement. “Establishing an ongoing dialogue and continued
interaction with Twitter’s unique user base can be highly advantageous for advertisers” (Pierce,
2015). For example, despite advertisers investing 127% more on Facebook, Twitter consistently
delivers a higher click through rate (Resolution Media, 2015), so advertisers get more eyes on
their content. Also, use of Lightning does not require Twitter membership, thus opening an

opportunity for advertisers to reach casual browsers. “Twitter has the incredible advantage of
being the place where the world already turns to share information” (Pierce, 2015), so advertisers
can take advantage of this worldwide attention.
Threat of substitute products or services. Twitter is successful at being event-driven,
allowing anyone to interact with newsmakers, journalists and celebrities as events unfold. This is
unique set of characteristics and a hard formula to replicate. Robust analytics tools allow users to
track performance of tweets, followers and engagement, to identify trends that help advertisers
market to a wider audience. Furthermore, Lightning promises to aggregate all content into one
feed, even if people are not following each other. Thus illustrating another way posts will reach
widespread audiences.
Rivalry among existing competitors. Currently, Twitter dominates at engaging people in
news surrounding live sports games and awards shows, but Facebook is developing similar
technology, purportedly geared to compete with Lightning (Levy, 2015). But, Twitter’s proposed
ad layout should prove more successful than Facebook’s, for Lightning will allow ads to appear
full-screen and immersed within timelines in mobile apps (Kim, 2013), whereas Facebook ads
appear to the right of, not embedded within, a person’s timeline.
Twitter will compete with traditional broadcasters who are seeing a decline of ad revenue
for the first time in history. Social network’s interactive advertising revenues for 2013 hit an all-
time high of $42.8 B, exceeding broadcast television advertising revenues of $40.1 B (IAB,
2014). These figures, combined with the fact that advertising revenue continues to grow
exponentially on mobile devices, creates a larger arena for Twitter to capitalize on.
Threat of New Entrants. It would be challenging for a new organization to take on
Twitter’s 316 million users, and there seems to be few threats from new providers to take away

market share from Lightning. In fact, Twitter’s venture into new territory with Lightning may
help create distance from its competition. As previously mentioned, the greatest threat to Twitter
Lightning comes from existing—not new—players who already have a stake in the market share,
like Facebook.
However, there is a looming potential threat from the relatively new social platform,
Snapchat. With nearly 100 million daily active users in the 18-24 demographic (Onfro, 2015),
Snapchat features a live stories section: curated content of a single event. Since this is what
Twitter Lightning is trying to achieve, it will be interesting to see who will do it better. “Both see
their greatest business and cultural potential in coalescing massive audiences to share a live
experience,” (Fast Company Staff, 2015).
The biggest issue hinging on the success of Twitter Lightning is when it will actually be
released to the public. In the world of technology where speed is everything, it’s challenging to
know if the money will follow this first major marketing push.
Final Assessment
We recommend Twitter go forward with project Lightning. Winning back lapsed
members presents great opportunities: to increase usage, to act as a gateway to convert casual
users to active users, and to collect more (and marketable) data in innovative ways for new
revenue growth. The greatest risk Lightning presents is diluting the Twitter experience and
alienating its core. Because Lightning augments rather than replaces the existing Twitter
experience, this risk is minimized. A secondary risk is that the engagement metrics of ‘full’
Twitter might not translate to the new experience and revenue will not track as expected. By
collecting and reselling data from this new source, some of the revenue concerns can be softened.

We anticipate Lightning will take the Twitter interface to the next level, creating a needed
and welcoming environment to engage in global events as they happen. If successful, advertisers’
ROI will increase with strong click-through-rates extending to a larger pool of users. Twitter’s
recently improved, robust analytics tools will allow advertisers to see where people are engaging
with content and where advertisements are gaining traction. Users will benefit from easier access
to communities and subjects that matter to them. Essentially, Twitter is where the world is
turning for conversations because it is where news breaks first.
Conclusion
Twitter provides a platform where the world’s news is first discovered, but Twitter needs
more of a compelling way to keep its followers engaged. Kevin Weil, Twitter’s head of product
development, sees a great opportunity in creating a new user experience. States Weil, “we can
create an endless browsing experience. There’s so much amazing content on Twitter, and it’s our
job to do a better job connecting users to the content they care about” (Newton, 2015).
By integrating improved analytics, opening the platform to non-users, allowing unconnected
people to share in conversations, and efficiently curating visual content surrounding breaking
new and events, Lighting is set to draw the attention of paying advertisers. If the Twitter
experience can be improved dramatically for both users and advertisers, and if Twitter focuses on
its core strength of being the first on the scene of breaking news and events, Lightning will put a
whole new spin on the 140 characters.

References
Fast Company Staff. (2015, August 17). Here’s why Snapchat and Twitter are barrelling toward a
social media collision. Fast Company. Retrieved from
http://www.fastcompany.com/3048628/heres-why-snapchat-and-twitter-are-barreling-
toward-a-social-media-collision
Goel, V. (2015, July 28). Twitter Revenue Up 61%, but User Growth Lags. The New York Times.
Retrieved from http://www.nytimes.com/2015/07/29/technology/twitter-quarterly-
earnings.html
Hof, R. (2014, April 10). Online Ad Revenues Blow Past Broadcast TV, Thanks To Mobile And
Video. Retrieved from http://www.forbes.com/sites/roberthof/2014/04/10/online-ad-
revenues-blow-past-broadcast-tv-thanks-to-mobile-and-video/
IAB.net. (2014, April). 2013 Internet Ad Revenues Soar to $42.8 billion, Hitting Landmark High
and Surpassing Broadcast Television for the First time. Retrieved from
http://www.iab.net/about_the_iab/recent_press_releases/press_release_archive/press_releas
e/pr-041014
James, M. (2015, July 1). Twitter Launches Project Lightning to Capitalize on Live events.
Market Realist. Retrieved from http://marketrealist.com/2015/07/twitter-launches-project-
lightning-capitalize-live-events/
James, M. (2015, July 28). Twitter’s Project Lightning could be called ‘moments.’ Yahoo
Finance. Retrieved from http://finance.yahoo.com/news/twitter-project-lightning-could-
called-130644316.html

Kim, L. (2013, November 5). Do Twitter Ads Work? Comparing the Ad performance of the
World’s Largest social networks. WordStream. Retrieved from
http://www.wordstream.com/blog/ws/2013/11/05/twitter-versus-facebook-ad-performance
Laudon, K, & Traver, C., (2015). E-Commerce Business Models and Concepts [excerpt]. In
Pearson Custom Coursepack COMM550. XanEdu publishing.
Levy, A. (2015, August 14) Twitter Inc. Should Fear this Small test from Facebook. The Motley
Fool. Retrieved from http://www.fool.com/investing/general/2015/08/14/twitter-inc-
should-fear-this-small-test-from-faceb.aspx
Lunden, I. (2015, January 20). 2015 Ad Spend Rises To $187B, Digital Inches Closer To One
Third Of It. Retrieved August 28, 2015, from http://techcrunch.com/2015/01/20/2015-ad-
spend-rises-to-187b-digital-inches-closer-to-one-third-of-it/
Onfro, J. (2015, May 26). Snapchat now has nearly 100 million daily users. Business Insider.
Retrieved from http://www.businessinsider.com/snapchat-daily-active-users-2015-5
Pierce, D. (2015, June 18). Twitter Is Killing Twitter to Save Twitter. Wired. Retrieved August
30, 2015, from http://www.wired.com/2015/06/twitter-project-lightning-timeline
McAlone, N. (2015, June 18) Twitter announces ‘project lightning’ could dramatically change
how people experience live events. Business Insider. Retrieved from
http://www.businessinsider.com/twitter-announces-project-lightning-to-help-you-track-
events-2015-6
Newton, C. (2015, July 28). The growth formula: Q&A with Kevin Weil, Twitter's head of
product. The Verge. Retrieved from http://www.theverge.com/2015/7/28/9051053/kevin-
weil-twitter-q-a

Peterson, T. (2014, November 4). Digital to Overtake TV Ad Spending in Two Years, Says
Forrester. Retrieved August 28, 2015, from http://adage.com/article/media/digital-overtake-
tv-ad-spending-years-forrester/295694/
Piskorski,M. J., Chen, D., Heil, B., & Smith, A. (2014). Twitter. Boston, MA: Harvard
Business School Publishing.
Psychographic. (n.d.). Retrieved August 28, 2015, from
https://en.wikipedia.org/wiki/Psychographic
Resolution Media. (2015) Social Trends Report - 1st Edition. Retrieved from
http://resolutionmedia.com/us/en/white-papers/resolution-media-social-trends-report/
Sacca, C. (2015, June 3). What Twitter Can Be. Retrieved August 28, 2015, from
http://lowercasecapital.com/2015/06/03/what-twitter-can-be-2/
Twitter Reports Fourth Quarter and Fiscal Year 2014 Results. (2015, February 5). Retrieved
August 28, 2015, from https://investor.twitterinc.com/releasedetail.cfm?releaseid=894844

EcommGroupprojectMegMarkKris

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (20)

Andere mochten auch

Andere mochten auch (14)

Ähnlich wie EcommGroupprojectMegMarkKris

Ähnlich wie EcommGroupprojectMegMarkKris (20)

EcommGroupprojectMegMarkKris