Originally posted in Specialtake.com on 14th March, 2012
Acquisition by twitter: its not Posterous . . . it’s the talent
Social networking sites being operative in the above the line (ATL) marketing (http://www.v7n.com/forums/marketing-forum/38819-what-above-line-below-line-marketing.html), has started acquiring the smaller sites like Twitter’s very recent acquisition of Posterous.
Yesterday (March, 13, 2012), the short-form blogging platform Posterous has sold to Twitter, only 19 days after denying any sale plans. Posterous is a simple yet innovative way of microblogging which showed immense potential initially by a neck to neck battle with Tumblr. Later on Tumblr emerged as the undefeated champion.
What is the Mathematics shadowing above the decision
Market share refers to the percentage of sales a company has in a specific market within a specific time period. For example, General Motors has about 37 percent of the annual unit sales of cars in the United States. Higher market share translates into higher profits. Gaining or building market share is an offensive or attack strategy to improve the company’s standing in the market.
Gaining market share is risky and expensive, hence you should first decide if it is a sensible move. It is a viable move when one or more of the following conditions apply:
1) In high-growth markets building market share is easier because there is a chance to share the pie with competitors without triggering a price war.
2) Developing an innovative new product is an opportunity to wrest market share from existing products by offering better performance or lower costs.
3) When a large company takes over a smaller firm, it can invest money and experience to expand the market of the smaller firm.
4) When the competitor is unwilling or unable to fight back (e.g. unable to cut prices) because it is in financial distress, busy with other opportunities or ignorant of the challenge you pose.
Among all, acquisition is somewhat easier & quick way of gaining benefit for the biggies. For example, Philip Morris International (PMI), is the leading international tobacco company despite the fact of tobacco industry being getting darker. Winning formula over the time is it expanded its business through a mixture of organic growth, geographic expansion, and acquisitions. PMI has successful track record of acquiring and integrating companies, including the recent acquisition of Rothmans Inc. of Canada. Other recent acquisitions in Colombia, Indonesia, and Serbia and increased investments in Mexico and Pakistan have also reinforced their position as the leader of the international cigarette market.
Why twitter acquired Posterous
It apparently seems that twitter wont sacrifice its unique selling proposition of micro blogging concept by going beyond 140 characters adapting Posterous’s comparatively large space. Then what benefit twitter is looking for?Probably the followings would answer:
- Get benefited by simultaneously acquiring its product manager and engineers as well. Posterous team will definitely be a valuable addition at Twitter.
- Utilize the technological know how of innovative approach of Posterous by improving the sharing.
- Gain quick shot volume of users as Posterous had 15 million monthly users.
Will Posterous remain alive anyways
After the acquisition twitter is saying that Posterous Spaces will remain up and running without disruption. But twitter is also clarifying that they’ll give users ample notice if they make any changes to the service. For users who would like to back up their content or move to another service, they’ll share clear instructions for doing so in the coming weeks. So it’s clear that, Posterous wont be alive more and twitter’s fame in acqui-hiring startups and shutting them down is only firming up which is evident by seeing that it didn’t take long for Posterous’ users to start looking for alternative options within one day of this big change. WordPress, which is clearly winning from this situation; according to blog that saw a 250% increase in imports from Posterous over the last hours.
As because Posterous’ business model isn’t totally compatible with Twitter’s own business model—so it’s evident that acquiring the talent would be the core objective of this acquisition. Now it would be interesting to see new innovation coming up with Twitter with the end of the chapter of Posterous.
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