Does Twitter add value to corporate/investor communications?

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New York – In the last few weeks, we have been following the increasing number of analysts and senior company executives who are on Twitter (many of the latter are aggregated by ExecTweets). While there has been a fair amount of buzz about the use of twitter as a tool for corporate communications, we remain rather skeptical about the idea that corporate tweeting adds much of value for investors.

There are a few cases where Twitter seems to be obviously useful. Conference and analyst-day attendants who use Twitter to disseminate and comment upon happenings are probably aiding the market as a whole by increasing the speedy disclosure of information that, in the past, was often kept behind closed doors. Furthermore, Twitter is obviously useful as a marketing and networking tool.

However, the weaknesses of Twitter are also quite obvious:

The 140-character limit makes it nearly impossible for analysts to convey much in the way of meaningful analysis or opinion. At best, analysts may be able to use it to alert their “followers” to a new report or article they have published. It is more a tool for marketing what one has published on existing platforms than actually publishing any original opinion. In this sense, Twitter is comparable to older one-to-many marketing methods such as voicemail blasts and mass emails.

As a medium for one-to-one communications, Twitter brings no visible benefits over existing instant messaging services, and adds the noticeable drawback that every detail of one’s communications becomes visible to the entire world. The claims by some that Twitter is a replacement for email and IM appear to be wildly overblown.

As a medium for many-to-many communications (ie, discussions), the unmoderated nature of Twitter creates a low signal-to-noise ratio. A quick glance at the “community” sidebar of the ExecTweets site reveals that the discussion is dominated by spammers and self-promoters.

Finally, what about many-to-one communications? How does Twitter compare to traditional RSS readers, email alerts, data miners, and other tools for an individual analyst or PM to gather info from the web at large? The results are mixed here. Assuming one can find the right Twitter sources to follow, Twitter is at least comparable to traditional RSS readers. However, the nature of Twitter encourages more frequent posting, and anyone following a large number of sources will find bits of info streaming past them at an unmanageable rate. Email readers and RSS readers have developed tools that allow users to tag important items for later review. Twitter currently lacks any meaningful organizational tools. This may be one of those cases where “more”, as in “more frequent updates”, is more of a detriment than anything else.

The value of Twitter for conference-blogging and a few other limited uses is immediately apparent, and one sees why marketers and PR types have taken it up with so much gusto. However, from the perspective of an analyst who has a limited amount of time, and given the enormous number of existing sources of info which are constantly flooding inboxes and RSS readers with info, it is rather difficult to see the value of adding yet another stream of distracting info to the queue of items that need to be mentally processed.

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