Facebook Creams Twitter

Last week, my fellow Fool Tim Beyers argued that Twitter trumps Facebook in Web 2.0 potential, making it the better growth story and acquisition target. I believe the exact opposite.

I'm not simply favoring the open-ended scope of social networking over a trendy micro-messaging megaphone. When I read Tim's primary gripe about Facebook -- that it "stinks at delivering ads" -- I was incensed.

This isn't a matter of the pot calling the kettle black. It's more like an imaginary pot calling the kettle black.

It doesn't ad up
Does Twitter serve ads? No. When it does -- and it will, sadly -- it will probably know me even less than Facebook knows Tim.

Facebook is just a toddler, so you'll have to excuse the teething pains. Its marketing algorithms will get better, as will its pool of available ad inventory. It knows where I am, who my friends are, and where I went to school. It knows my favorite music, books, and movies. It knows my political and religious bents. Labeled snapshots tell it where I've been. Virtual event invitations tell it where I'm going.

What does Twitter know? It knows whatever I can spit out, a handful of syllables at a time. It may know where I'm from. It can probably connect the dots between the people following me and those whom I follow, as a poor man's version of Facebook's "Friends" data pool. That's pretty much it.

If online advertising leader Google (Nasdaq: GOOG  ) thought that pumping out relevant ads to users on News Corp.'s (NYSE: NWS  ) MySpace was a tough gig, just imagine the Googleplex's teeth gnashing over how to make money from Twitter's ad space.

The tide is high, but the tithe is higher
Tim also feels that Twitter and Facebook are passing ships. He believes that Facebook's proposed valuation has shrunk since its air-brushed $15 billion price tag a couple of years ago, while Twitter's asking price keeps adding more zeroes than a Klingon language class at a community college.

Well, let's stop right there. Even the more recent buyout whispers valuing Twitter at a rich $700 million still amount to less than the $850 million that Time Warner (NYSE: TWX  ) paid for second-tier social networking site Bebo last year.

To be fair, this isn't a battle of whether Facebook or Twitter is worth more. Even Tim would have to concede that Facebook would command the far greater market cap if both companies went public next quarter. This is a debate over which Web 2.0 weapon would provide more bang for the buck, and I just can't see how an untested, non-monetized Twitter can be anything more than a huge question mark at this time.

Will hardcore users pay for premium tweet treats? Will the clones come out once Twitter begins slowing down the site with ads? We already know that Facebook is able to generate some money. Twitter falls into the same camp as popular sites like Craigslist and Wikipedia, where mainstream monetization is uncertain at best and fatal at worst. Facebook crossed over, and becomes more popular with every passing ad click.

Give me Twitter or give me breadth
I do like Twitter. I've been a fan of its founders since their Blogger days. However, that should be a lesson to all of us. They were able to generate a hotbed of user-created content, but they couldn't effectively monetize it until they handed it over to Google.

Facebook isn't waiting around. It's making its own luck, and finding little trouble rounding up believers. When Facebook opened up its platform to third-party developers two years ago -- fashionably ahead of the rest of the pack -- heavy hitters like Amazon.com (Nasdaq: AMZN  ) , Warner Music Group (NYSE: WMG  ) , and Washington Post (NYSE: WPO  ) stepped up.    

Twitter has also attracted self-serving corporations and artists, but only as a do-it-yourself soapbox. It's a podium, but lacks a teleprompter. Traffic-hungry portals and media companies know exactly where a Facebook would fit into their grander plan of marketing propagation. Twitter is a puzzle piece with undefined edges.

Twitter is replaceable. In its present form, it's little more than a one-way dirt road of hero-worship. Facebook is a vibrant highway, where connections to family members, colleagues, and friends are trickier to uproot. It is why Facebook has had no problem with growing even as it populates its site with in-house and Microsoft (Nasdaq: MSFT  ) ads. Twitter, for all of its buzzword charm, hasn't earned that kind of billboard-slapping bravado.

I hope it does, because Twitter rocks.

Unfortunately for Tim, Facebook just rocks harder.  

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Longtime Fool contributor Rick Munarriz remembers when social networks were an offline endeavor. He does not own shares in any of the companies in this story. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.


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  • Report this Comment On May 19, 2009, at 7:08 PM, Masterofdabull wrote:

    I have accounts or memberships in Twitter, My Space and FaceBook. Facebook beats the others by a mile. Facebook opens to a home page with the ads (local ads too) on the right side. No funny backgrounds that eat up space and has all the bells and whistles on that opening page that you, the visitor can choose. They have many applications that people choose from, even games. I looks like they have taken the best of Google, Yahoo, Twitter, MySpace, Blog and many more. But it is all organized. If there are other whistles that the others have that Facebook does not have, I haven't found them yet. And no I do not work for the company. I'm sure the other foot will fall someday but until that day, dang if it ain't the cats meow.

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