Twitter Inc (NYSE:TWTR), whose initial public offering can only be viewed as a resounding success, is heating up its battle with Facebook Inc (NASDAQ:FB) over celebrity use. Perhaps, it would be better said by suggesting that it is Facebook that is ramping up the rivalry between the two social network giants.
According to Bloomberg sources that have asked to remain anonymous, Facebook will soon be rolling out tools that will make it easier for celebs to interact with their followers.
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Facebook plans to disrupt Twitter’s celebrity use
The microblogging nature of Twitter Inc (NYSE:TWTR) was immediately jumped on by celebs that found the 140-character format of the Tweet perfect for addressing their fan bases. Now, Twitter as a publicly traded company, will need to hold on to these celebrities in order to justify its valuation. Facebook Inc (NASDAQ:FB), however, plans to disrupt Twitter Inc (NYSE:TWTR)’s celebrity use.
“This is an area of strategic importance to us,” said Justin Osofsky, vice president of media partnerships and global operations at Facebook Inc (NASDAQ:FB). “We’ve been building our partnerships team in Los Angeles and globally to better work with celebrities and media partners and simultaneously investing in products that better surface the conversation.”
While Osofsky refused to tell Bloomberg what the company had in mind, it’s believed that it will be only a matter of weeks before the company launches a full-scale attack on Twitter.
Large valuations increase the stakes
It’s important to remember that just two years ago both companies were simple upstarts funded by venture capital. They were not the companies that they are now, where their combined valuations are rapidly approaching $150 billion. Social media advertising is expected to come in at $11 billion in just three years time, where advertising in this arena was just $4.7 billion last year.
That’s enough money to really up the stakes between the two.
“We compete against many companies to attract and engage users, including companies which have greater financial resources and substantially larger user bases,” Twitter said.
Twitter Inc (NYSE:TWTR)’s market capitalization is only roughly 20% that of Facebook Inc (NASDAQ:FB)’s but with those advertising dollars up for grabs that could change quickly.
“They are competing on core functions that each service needs,” said Josh Goldman, a general partner at Norwest Venture Partners, in an interview with Bloomberg. “That is sort of creating a battle between these two companies, even if the use case is different.”