Twitter’s attrition rate dogs IPO

Oct 21 2013, 04:13 IST
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SummaryRetired schoolteacher Donald Hovasse signed up for Twitter about a year ago at the urging of his daughter.

Retired schoolteacher Donald Hovasse signed up for Twitter about a year ago at the urging of his daughter. He lost interest after trying the service a few times and finding lots of celebrities but few of his friends using the online social network.

“I didn’t really get the point of it at all,” said the Las Vegas resident. “Most of them were people I wasn’t interested in hearing what they had to say anyway.” He said, however, that he does check Facebook every day to see what his friends are up to.

Hovasse’s experience highlights a risk for investors as Twitter Inc marches towards this year’s most anticipated initial public offering in the US, expected to begin trading on the New York Stock Exchange in mid-November.

According to a Reuters/Ipsos poll, 36 per cent of 1,067 people who have joined Twitter say they do not use it, and 7 per cent say they have shut their account. The online survey, conducted October 11 to 18, has a credibility interval, a measure of its accuracy, of plus or minus 3.4 percentage points. In comparison, only 7 per cent of 2,449 Facebook members report not using the online social network, and 5 per cent say they have shut down their account. The results have a credibility interval of 2.3 per cent.

Twitter declined to comment for this story, saying it is in a quiet period ahead of its IPO.

Twitter’s attrition rate highlights a challenge that has dogged the online messaging site over the years: while it has managed to enlist many high-profile and avid users, from the Pope to President Barack Obama, Twitter has yet to go truly mainstream in the way Facebook has.

Twitter reported it had 232 million “active” users — people who access the service at least once a month — at the end of September, up 6.1 per cent from June-end. Twitter’s quarter-over-quarter growth in active users has not exceeded 11 per cent since June 2012.

When Facebook was a similar size, its active users were increasing by more than 20 per cent every quarter, and it was not until the social network neared the half-a-billion member mark that its user growth decelerated to 12 per cent.

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