What Do Google and Salesforce See In Possibly Acquiring Twitter?

Twitter will be of greater value to potential acquirers than it has been to advertisers, users and its own shareholders. The reasons, as the following two articles explain, have to do with the ways in which its user base and immediacy can be harnessed to promote larger platforms.

Most specifically, whoever ends up getting Twitter will have useful platform with which to take on Facebook. JL

James Fontanella-Khan and colleagues report in the Financial Times and Ken Wisnefski reports in The Street:

Twitter will continue to have difficulty becoming a viable advertising platform itself, (but) the value of its users could prove to be a door opener for Google. What Google failed to do with its social network Google+ it could begin to do with Twitter. Salesforce’s chief digital evangelist said in a personal tweet: “Why Twitter? 1 personal learning network 2 the best realtime, context rich news 3 democratise intelligence 4 great place to promote others.”

Twitter has held preliminary discussions with Google and Salesforce about a potential deal to buy the social media pioneer, according to people briefed on the talks.
The San Francisco-based company — known for its little birdie symbol and its 140-character tweets — has been working for several weeks with Goldman Sachs and Allen & Co to explore a sale of the company, valued at nearly $16bn on Friday, those people said.
Goldman has also contacted a number of global media companies to gauge their interest in a potential deal but none have expressed serious interest.
Technology analysts say media companies such as Fox, Comcast, CBS and Walt Disney could be potential buyers of the site, which recently reclassified itself as a news app in the app store.
Twitter’s shares rose 20 per cent to $22.82 on Friday after CNBC reported that it was in early stage talks with Google and Salesforce. Before the report its market capitalisation was about $13bn. Salesforce shares were down 5.6 per cent by early afternoon Friday.
Twitter, Salesforce, Google and Goldman declined to comment.
Vala Afshar, Salesforce’s chief digital evangelist, said in a personal tweet: “Why Twitter? 1 personal learning network 2 the best realtime, context rich news 3 democratise intelligence 4 great place to promote other.”
Speculation about a sale has swirled around Twitter for several months as the company has struggled to meet expectations for user growth. Beloved by journalists, professionals and celebrities, the site has struggled to win over a broader audience who have been reluctant to chronicle their own lives and stuck to rival social media platforms.

Goldman helped the company go public two and a half years ago and Anthony Noto left the US investment bank to join Twitter as its chief financial officer. It is unclear whether the adviser has an official mandate from Twitter to sell the company.A big valuation does not come with much cash flow and M&A firepower is thin. Robert Peck, an analyst at SunTrust Robinson Humphrey, said a deal could be necessary for Twitter as the company struggles with slowing user growth.

“If the current trend of meagre user and engagement growth remains, we think it’s inevitable that Twitter will need to pursue M&A alternatives,” he wrote in an analyst note.Twitter’s stock has tumbled since it hit an all-time high of $69 a share in January 2014, a few months after it went public at $26. Back at the time of its initial public offering, investors hoped it would be the next giant social platform after Facebook. Facebook has a market capitalisation about 24 times larger than Twitter, while social app Snapchat also has a higher valuation on the private market.Twitter is struggling to attract new users despite bringing back co-founder Jack Dorsey as chief executive, a reshuffle of management and a shake-up of the product that included abandoning its signature chronological timeline.  The Street article continues below:Twitter (TWTR) investors are seeing a nice boost in share price today on rumors of a sale. Of the two companies looking to buy the troubled social media platform, Alphabet's (GOOGL) Google and Salesforce (CRM) , Alphabet appears to be the one most likely to be able leverage Twitter's data and user base to drive revenue.

Twitter is a great platform for a large number of people for an equally large number of reasons, it's just not very valuable to advertisers, otherwise known as Twitter's main source of revenue. The dynamic of Twitter is quick info, and while its usefulness and impact has been incalculable, its user growth has remained stagnant, as has its ROI for both advertisers and investors.
So what could be driving the interest? While I do think Twitter will continue to have difficulty becoming a viable advertising platform itself, the value of its users could prove to be a door opener for Google. What Google failed to do with its social network Google+ it could begin to do with Twitter.
Google is one of the richest corporations in the world, and how it has amassed that fortune is primarily by selling ads that are related to people's search queries. This is an extremely effective way to reach customers, because when you know exactly what somebody is searching for, you can deliver ads directly related to those queries. For some circumstances, it really is the only way to go.
But in other circumstances there is a different way to target customers and that's using ads based on demographics, in Google's case that's called display ads. With demographics essentially you can reach users who you know have an interest in what you have to offer. When it comes to this type of advertising, Facebook (FB)  is king. Facebook knows your age, sex, behaviors, what you like, it knows what you like to talk about and even what you've said. On top of all that, Facebook buys information about its users from third parties to know even more about them. Facebook uses all that information to match its users to the appropriate ads. Marketers supply Facebook with the info to match up to. And yes, it has been very profitable. In my own marketing agency, Facebook has begun to eat up a percentage of ad budgets typically slated for Google.
If Google is still looking for ways to compete with Facebook on display ads, while creating a more effective environment where marketers can choose specific user traits, then buying Twitter could be a real way forward for them.Although Twitter’s user base will continue to grow, its share of worldwide social network users will remain virtually unchanged at about 12 per cent, according to eMarketer, a digital research company.