When it comes social media, there’s really just two players that matter: Facebook (NASDAQ:FB) and Twitter.
But while it might seem like the pair have a virtual monopoly as far as basic social networking goes, remember: The Internet market can be brutal, as was seen with former hot operators like Yahoo (NASDAQ:YHOO) and AOL (NYSE:AOL), as well as social media has-been MySpace.
So it’s not necessarily a given that both will stick around forever. But which one has more staying power? To answer this question, let’s break it down across several key factors:
Facebook is the clear winner here. People universally want to gather and share information about themselves, their family and friends. And Facebook has a huge advantage considering the pitfalls to joining an alternative network — namely, why would someone go to another basic site that has fewer members? Would it be worth the time to create a new page and move all your photos? These very questions are why Google’s (NASDAQ:GOOG) G+ network has not seen much traction.
Twitter, on the other hand, has much less engagement with its users. Keep in mind that most visit the site to read comments from others — not to necessarily share information or post photos. It’s primarily a passive activity. Because of this, users might not be as committed to the platform itself, which could make Twitter more vulnerable to alternatives.
Platform Power: Facebook
Back in 2007, Mark Zuckerberg made a critical investment, building a system for developers to create apps. Zuckerberg realized he did not have the resources or the creativity to make everything users wanted, so why not allow third parties to help improve things?
It was a brilliant decision. Facebook was able to greatly increase its engagement, especially with the emergence of social games.
Facebook also was smart to create a Payments network, and because of this, the company has built a substantial revenue stream from partners like Zynga (NASDAQ:ZNGA).
While Twitter has its own developer platform, it is much more limited. For the most part, it is about making tweets better, such as for filtering and organization.
Twitter should have an advantage as traffic moves toward mobile. Many users are accustomed to clicking links, which easily could be tied to advertising. Meanwhile, Facebook tends to keep users on its site. This means it can be tough to get a sense of whether ads are really working — namely, if users are looking at the ads or just ignoring them.
However, until recently, Twitter has been lackadaisical with monetization. For example, last year it generated revenues of a meager $140 million last year.
The good news is Twitter has been working hard to improve this area, such as with new ad formats and programs, and the company believes it can reach $1 billion in revenues by 2014. Then again, Facebook already generates $4 billion.
Before continuing, it’s worth pointing out that it’s extremely unlikely that either Facebook or Twitter will implode. Both have powerful brands, as well as useful services.
But Facebook has more advantages, in terms of engagement, and the service appeals to all demographics.
However, Twitter appears to be focused on younger users, as far as content generation and building a following go. Thus, its user base might never reach the massive levels of Facebook, and Twitter ultimately could run into growth constraints in the next couple years.
So, because of its universal nature, Facebook likely will outlast Twitter.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”, “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.