Yes, Twitter is a phenomenon. That’s a given. But will Twitter be more than a 21st century version of the Pet Rock? Will it gain ongoing traction with the population? And, most importantly, will Twitter ever figure out how to make money?

Twitter's retention rate after one month is just 40%. At that rate, it will never have more than 10% of total online users, according to Nielsen Research

A recent study posted by David Martin with Nielsen Online noted that Twitter’s retention rate hovers around 40%. That means that 60% of the people who sign up for a Twitter account stop using it after a month. It’s almost impossible for a company to grow reach when their audience fails to return after one month. And, according to the data provided by Mr. Martin, at Twitter’s current retention rate, it will peak at about 10% of online consumers.

Mr. Martin also studied the MySpace and Facebook retention rates in their first few years when their reach looked more like Twitter’s current reach. At that time, both MySpace and Facebook had steadily-growing retention rates of more than 40%, which moved closer to 60% as time moved on. Twitter’s retention rates have fluctuated without passing 40%.

All this begs some questions, which we’ve answered below:

1. Is social media over-hyped? Yes, it is. If you take a look at the Gartner Hype Cycle, you’ll agree that social media is currently at the top of the “Peak of Inflated Expectations” curve.
2. Should marketers give up on social media? No, just because social media is over-hyped doesn’t mean you should give up on it. It just means that it will end up as one of many tools in the marketer’s toolbox.
3. Is Twitter a waste of time? Yes and no. It’s a waste of time if you’re addicted to inane comments about the weather and favorite music choices. But if you use it as a tool to 1) build awareness for your brand and 2) drive visits to your landing pages, it can generate very solid revenue. Just ask Dell Computers who has generated millions of dollars in incremental revenue from one of its Twitter accounts.

The bottom line is this — social media isn’t going away and neither is Twitter. People who say it’ll never amount to anything are just as wrong as the people who say it will solve all your marketing problems. The truth is, Twitter, YouTube, Facebook, LinkedIn and other social media tools can be very valuable, if you use them properly.

Follow Up — For an excellent counter argument to the Neilsen research, be sure to check out the By We, I Mean You blog. Here’s a short excerpt: 

“It didn’t take long for actual users of Twitter to find serious flaws in Nielsen’s findings. Chief among them, Nielsen can only account for activity on Twitter.com. They are not accounting for the use of 3rd party apps like Seesmic and TweetDeck or the use of mobile devices. According to TweetStats, over 40% of tweets are coming from tools other than Twitter’s site. A significant percentage of “returns” are not being captured in Nielsen’s analysis.”

For the entire posting, visit Twitterers are Quitters?

Wednesday, April 29th, 2009, 3:42 pm   |   Social Marketing  |  RSS feed |  Respond  |  Trackback