Image source @ Visual China
In the appearance of the |, the author | Zhou Xiao wang huimin, and the editor | Fu Xiaoling and Cao Binling
On Saturday, in order to block the "barbarian at the door" Musk, Twitter swallowed a "poison pill".
By triggering the "poison pill plan" (anti-takeover measures of equity dilution) with a 15% stake, Twitter can indeed hold back the time and cost of Musk's acquisition of Twitter.
However, it will also be "regurgitated", and once the poison pill plan is implemented, it will also have a significant impact on the structure of the company's control - on the one hand, the shareholding ratio in the hands of the original shareholders will be passively diluted, and on the other hand, the rights and interests of other shareholders will be damaged.
In fact, Twitter is no stranger to selling itself, and in the second half of 2016, Twitter took the initiative to contact a number of companies, such as Google, Alphabet, etc., to seek the opportunity to be acquired.
This is the same as now at the expense of "wounding the enemy one thousand and self-inflicting eight hundred" to block the acquisition, which is almost like two people. So why?
Just look at the stock price performance:
In other words, Twitter has reversed its predicament and made its control a significant value.
Speaking of Twitter, we have to mention its "Chinese apprentice" Weibo, and after taking a look at its situation, I found that its stock price is now at the bottom like Twitter in 2016.
In terms of single-user value, the two are comparable in volume, but the market value of Weibo's single-user is only one-seventh of Twitter's.
In this way, can Weibo reverse its value like Twitter? Below, this article will analyze the user's basic disk and the monetization growth disk.
While Twitter's 2016 results were grim, the start to this round was highlighted.
Google's rapid rise has reportedly put pressure on Google, which highlighted Twitter as its fourth competitor in a 2010 filing with the U.S. Securities and Exchange Commission.
That same year, Zuckerberg also said in an interview: "I looked at Twitter's growth rate and thought if the growth continued for 12 or 18 months, then within a year, they would surpass us in size." ”
However, the truth is that after 2010, the gap between Twitter and Facebook's user size has become wider and wider, and in 2016 it was less than one-fifth of Facebook's size.
Because of this , user base growth stagnated , and Twitter's stock price fell to the bottom in 2016.
So why are the two always opposites? We cut the time back to the beginning.
In the summer of 2007, an earthquake struck Mexico City, USA, and locals immediately sent out the news of the earthquake. That's an hour faster than CNN (china's equivalent of CCTV), which is known for its first-time broadcast of information.
That was the first time Twitter exhibited the characteristics of rapidly disseminating news, and since then, it has continued to deepen that attribute.
For example, in 2011, twitter for newsrooms, an integrated news resource platform, was launched to optimize the publishing end; in 2015, a separate news tab was set up in the application navigation bar to facilitate users to read information.
This has attracted a large number of media outlets, such as the Wall Street Journal, Harvard Business Review, Time, BBC News, Breaking News, ESPN and many other mainstream news outlets, which have been on Twitter for a long time.
Three years later, Sina launched the "Chinese version of Twitter" Weibo, but it followed the path of Sina portal and blog - introducing KOLs in various fields and relying on star "platforms" (Yao Chen, Han Han and other phenomena).
Of course, the "celebrity effect" dividend is considerable, and in less than half a year (as of January 2010), Weibo has gained more than 75 million registered users.
Full of the sweetness of the "shortcut" and can't forget the taste of Weibo, the path is regarded as the main road of development: continue to create a head celebrity.
For example, the MCN management system was launched in 2016, and the number of cooperative MCNs increased by 289% between 2017 and 2018.
Under the strategic focus, Weibo's red ecology has gradually improved, and a large number of first-generation Internet celebrities such as Papi Sauce, Zhang Mofan, and Samba Rabbit have appeared, and users love them like stars.
That is to say, in the development stage of Twitter, it is building the attributes of a professional news and information platform; Weibo is constantly deepening the attributes of entertainment.
So, what is the effect of these two properties?
As we discussed in the article "The Transmutation of "Entertainment to Death": Stealing the Old World", the leisure and entertainment mode is easy to be replaced by other entertainment modes, and the functional mode is to a certain extent a specific just need and is weakly replaced.
This determines that Weibo, which builds content around celebrities and celebrities, can quickly gather traffic, but the traffic stickiness is not high, and it is easy to go to other entertainment platforms; and Twitter, which has functional attributes, its user volume and stickiness will gradually increase with the deepening of the function, but it needs to go through a long period.
This is also confirmed by the data. As shown below, Weibo used one and a half years, and the number of users exceeded 100 million. In contrast, it took Twitter four years for users to climb to the billion level.
If the pace of natural development is followed, the early advantages of Weibo may be extended for a few years, and Twitter's climb is the same. However, in 2017-2018, the iteration of entertainment models and the rise of short videos changed the process.
It can be seen that since 2018, the rise of Jitter has threatened the user stickiness of Weibo: the user time has continued to decrease.
Of course, Weibo did not "sit still" and continued to expand content (there are many related discussions, not to be expanded here), but the centralized distribution method of adapting entertainment content has led to most of the platform traffic always revolving around celebrity Influencers no matter how the category changes.
For example, the first thing your homepage is recommended is the content of major marketing accounts, the latest updates of friends, and it is difficult for you to see.
However, if a friend likes the content of the marketing account, Weibo will immediately notify you at the video account entrance, induce you to click to watch, and distribute it for secondary distribution.
In this way, other vertical content that can cultivate long-term interest in users is difficult to do, and the end result is to further deepen the entertainment attribute.
As a result, in the face of the continuous impact of more "entertainment to death" short videos, Weibo's user time has been declining.
Compared with Weibo, Twitter in the same period, the user time is turning upwards, and TikTok is consistent, sticky to Facebook.
So why did Twitter complete the climb so quickly?
Twitter's (2017Q1 conference call) official explanation is that the improvements made on the product allow users to regain growth.
The improvement here refers to: the function has been added to the previous timeline recommendation, and the limit on the word count of 140 has been weakened, and the expression space has become larger.
However, we believe that the more critical reason is the enhancement of functional attributes by the distribution model.
After experiencing the crisis of seeking to be acquired, Twitter realized the problem of focusing on single categories and climbing slowly, and began to make up for the shortcomings of category expansion, specifically:
In 2018, entertainment and sports content such as Viacom's new video drama and ESPN's SportsCenter Live program were introduced; in 2020, the topic function was launched, similar to Weibo topics.
According to the 2020Q3 conference call: We want to show people the big picture of Twitter, not just what people see in news and politics.
Thanks to the platform's timeline distribution model, "popular" content expansion has not changed the platform attributes. In the chart below, according to statistics, in July 2020, the ten hottest topics on the platform were evenly distributed in various categories.
The development of more categories of content has significantly boosted the number of users on the platform in 2018-2021.
The platform path dependence determines that one faces short videos and has no power to fight back, and the other under the impact of short videos, users still maintain growth, and the gap between the basic disk is obvious. It's not hard to see why investors value the two so differently.
However, the user's basic disk is only the foundation, and investors are more concerned about whether they can make money. In terms of monetization, there seems to be a path dependency as well.
It is said that American investors are "blue-chip enthusiasts" in their bones, and their patience with "temporarily unprofitable" is limited. Before 2017, Twitter continued to lose money for twenty quarters, and market confidence can be imagined.
So, why did Twitter, which already had 1 billion registered users at that time, lose money for nearly six consecutive years?
The answer is: the fragility of the income structure.
As mentioned above, Twitter as a functional platform, users consume content, mainly to watch, the activity is not high.
For example, the technology website Re/Code reported in 2014 that among Twitter's more than 1 billion registered users, the number of active users was only 241 million, accounting for about 20%.
This obviously doesn't match performance ads that require interactive clicks. In other words, in the early days of Twitter, there was only one way to go through brand advertising.
Even according to the Twitter Conference Call: 2021Q3 platform brand advertising and direct response advertising contribution ratio, it is still as high as 85: 15.
And the risk of such a "one-legged walk" is: not anti-cycle. In the chart below, under the downward cycle of the advertising industry in 2017 and the black swan of the epidemic in 2020, big advertisers tightened their budgets, and Twitter's overall revenue elasticity was seriously affected.
From this point of view, the monetization under the path dependence of Twitter is naturally unfriendly to performance advertising, so how about Weibo?
The much-maligned "rice circle culture" was actually the "gold pool" that best matched the path of the Weibo platform.
Around 2015, the era of traffic in China began. The characteristics of Weibo celebrity gathering and centralized distribution perfectly match this demand - celebrity Internet celebrities are heavily marketed, and fans are playing the list day and night to brush traffic.
With the meat in front of you, is there a reason not to eat it?
In this way, the super talk and list have become a place where the rice circle must be contested under the intention of Weibo.
And where the traffic is, the advertiser is there. As shown in the figure below, from 2016 to 2018, Weibo advertising revenue grew rapidly, earning "full pots".
However, the highlight of performance has hidden huge hidden dangers.
Relevant statistics show that in those years, Weibo hot search showed a full entertainment trend. In the chart below, 17 of the top 20 hot search lists on a certain day in April 2018 are entertainment star content.
In the excessive traffic economy, the normal community atmosphere is destroyed, ordinary users have become the "silent majority", and the traffic is further concentrated to the head.
This means that the higher the advertising space, the greater the exposure, but also the high price.
This will undoubtedly kick some small and medium-sized advertisers out. As the financial report shows, from 2018 to 2020, the number of small and medium-sized advertisers on Weibo dropped from 2.9 million to 1.6 million, and in the first three quarters of 2021, compared with the same period in 2020, it decreased by 600,000 to only 800,000.
At the same time, excessive entertainment exposes regulatory risks, and Weibo must not reduce the proportion of entertainment content. For example, it has dropped from 30%-40% last year to about 25%.
Traffic aggregation weakens, accelerating the escape of large advertisers to new traffic gathering places such as Jitter.
This naturally affects the performance of cash, as shown in the following figure, after 2018Q2, Weibo's advertising revenue growth rate continued to decline, and 2020Q1 showed negative growth.
In summary, the monetization of Weibo and Twitter under their respective path dependence has problems in terms of performance advertising. But as we all know, the advertising industry is increasingly emphasizing the integration of product and effect, feeling the pressure, and both companies are trying to "seek change".
In July 2020, the "Weibo Video Number Plan" was launched, which will be divided into 500 million yuan to creators in the next year, and traffic will be tilted to video content through the launch of the content social platform "Oasis" and the short video product "Planet Video".
The reality, however, is that the input hits the "water drift".
For example, Oasis was spat upon as "more desolate than the Sahara" – another project that was supported by the interaction between fans and stars who frantically completed Oasis KPIs.
Ordinary creators and users are marginalized, 500 million "money temptations", only short-term catalyzed short videos, "banknote capabilities" disappeared, quickly "declined".
Of course, Weibo does not only bet on short videos, but cuts into a number of "ways out" at the same time: live broadcasting, e-commerce, etc., but also because it cannot break through path dependence, there is no obvious sign of erection.
In the chart below, the growth rate of value-added services continues to decline, and the proportion is always around 13%.
Remarks: Weibo's e-commerce, live broadcasting, membership and other business revenues are counted in value-added services.
Compared with Weibo's drastic increase in content form, Twitter focuses more on the details of the platform's functions.
For example, in 2017, the increase in interest stream recommendations, coupled with the expansion of the platform's content category, increased user activity, which had a positive impact on the advertising conversion rate.
According to the 2018Q1 conference call: Overall advertising engagement increased by 69% over the same period last year.
In 2020, the platform functions have been improved again, and many functions such as topic, audiospace, and story have been launched, which are basically centered on improving user activity.
According to the 2021Q1 conference call: In the context of more and more users paying attention to interest content and topics, Twitter's advertising accuracy and recommendation relevance have improved.
The increase in click-through rate and conversion rate is reflected in the financial aspect, that is, from 2020Q4, Twitter's advertising revenue growth rate soared.
In addition to advertising, Twitter's news content attributes, adapted to another monetization path subscription payment, are also accelerating the pace.
In June 2021, Twitter launched twitter blue, a subscription service that went live in the United States, Canada, Australia, and New Zealand.
In this regard, Twitter expects to say: Although Twitter Blue has a small share of our revenue, it will create huge opportunities for us in the future.
With user size and performance trends improving, Twitter has given high guidance for the future: by the end of 2023, mDAU will increase to 315 million, an increase of 1.4 times compared with the current level; revenue will reach $7.5 billion, which is twice that of 2020.
A lack of commercial stories, a room for growth with considerable certainty, so it is difficult for the former to replicate the original reversal of the latter.
brief summary
Musk's inevitable reason for Twitter, according to his public speech, is for the future of Twitter, for the future of human civilization! But in essence, it is still profitable.
In the competitive environment of the rise of short videos and the iteration of content models, Twitter's path dependence from the news function attributes has accumulated and accumulated, and its certainty in the user's basic disk and monetization has been continuously strengthened.
In contrast, the path dependence of Weibo entertainment, although it opens a window to the traffic economy, also closes the door to other possibilities, and the road is getting narrower and narrower.
This makes Weibo "difficult to return" to a certain extent.