Thomas Clayton is the CEO of Bubbly, a social media startup backed by Sequoia Capital, SingTel Innov8, and JAFCO.
Twitter has experienced a few highs and lows as a public company since announcing its IPO in November. Now on the verge of the company’s first quarterly earnings report, there’s already a major issue Twitter needs to address to keep its future looking bright: users in Asia are increasingly losing interest in the service.
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According to a report by social media research company Semiocast, Asia was once the fastest growing market for Twitter in the summer of 2010. This growth has since been slowly waning and has now reached a noticeable tipping point.
This is particularly alarming for Twitter in areas like South Korea and Japan, where mobile device usage and wealth are prevalent, and lack of access isn’t an issue.
A report by the analytics company CYRAM indicates that as of August 2013, 64 percent of South Korea’s approximately 7 million users hadn’t tweeted in over six months. This number has gotten significantly worse from the prior December, when it was at 56 percent.
In order for Twitter to fully capitalize on the benefits the vast Asian market has to offer, the company needs to focus on keeping users engaged and generating enough advertising cash to be profitable. Here are my thoughts on how Twitter can reverse its outlook in Asia.
Make its community smaller and more exclusive
The most influential markets around the world have spoken: when it comes to social media, less is more. Furthermore, Twitter users in South Korea and Japan have said they’re quitting the service because it’s too open, too crowded, and too difficult.
People are tired of scrolling through seemingly endless photo streams and bogged down newsfeeds. Instead, the tide has turned toward sharing that is more closed and simple. Just look at the rampant success of services that employ this strategy such as Snapchat, WeChat, and LINE – to name a few.
With this trend in mind, Instagram recently added a new private messaging feature that allows users to share photos and videos with a small group of followers, rather than to one’s entire follower base. This is exactly the kind of step that Twitter needs to take to get back in touch with its Asian user base.
Right now, people in Asia view Twitter more as a news delivery tool rather than a place to share and interact with friends. By expanding the Direct Message feature to allow users to share with a small group of followers, it would make Twitter more relevant for social sharing and give them a chance to pull Asian users back in.
Adjust monetization strategy
Since smartphone penetration is relatively low across South and Southeast Asia, Twitter also has a lower penetration rate and a far lower monetization rate, as an ad-model doesn’t really work with feature phone users. Therefore, this leaves Twitter in need of an alternate earnings route.
In my opinion, the best way for Twitter to generate revenue in emerging markets is to partner with local carriers. This is definitely not the norm these days in the West, where partnering with mobile operators is a thing of the past. However, working with operators in Asia is the best way to reach the most number of people.
In emerging markets, operators have the existing infrastructure needed to reach the masses, and Twitter could reach far more users over simple SMS – just as it did originally in the U.S. before smartphone apps existed.
This would also give Twitter an alternative charging and monetization option: users’ prepaid cards, the only ubiquitous billing mechanism across these markets.
Currently, the largest 40 operators across Asia represent more than 90 percent of all subscribers, which comes out to more than 2 billion potential users. These numbers alone speak for themselves.
What may be surprising to some is that many feature phone users are very willing to spend for simple service features, because paying for content on the mobile web is engrained in their culture. They don’t expect all Internet services to be free, whereas Westerners will spend more time searching for workarounds to avoid additional charges.
This is why selling virtual goods, which are intangible objects in online communities such as ways to upgrade or personalize the service, could also be a viable revenue-generating strategy for the company. It has been a successful route for companies like Tencent, which have brought in billions through these kinds of sales.
Add culturally relevant features
Stickers are essentially a must on social networks these days in Asia. One reason stickers have been so successful in Asia, is that they help people to express their emotions accurately and concisely – often much faster than it would take to type them in local language characters.
In Asian languages, long-winded responses are frequently needed to accomplish this. The use of a sticker not only solves this problem, but it adds humor and fun to social interactions that many users enjoy. Just look at emojis for example.
These could fall right in line with the before mentioned suggestion of Twitter adding a line of virtual goods. If the company released a package of purchasable stickers, it could capitalize on Asian trends and spending behaviors in one swoop.
However, before the results unfold on February 5, Twitter needs to take a hard look at the Asian market and make some very specific changes. Asia doesn’t fit into the same business model mold as other continents, and it has the potential to pay serious dividends.