No Need for Jitters Over Twitter

CHICAGO ( TheStreet) -- It's been a dizzying decade for the tech-challenged business owner. Staying current means sifting through a confusing array of "it" websites, from Flickr to Facebook to Foursquare, each supposedly with the power to transform the way businesses and customers communicate.

At first glance, Twitter was an unlikely Internet success story. The 140-character limit on messages seemed designed for transmitting superficial information. Did anyone really want to get updates from friends about what they ate for breakfast?

But Twitter managed to confound expectations. Celebs such as Lady Gaga and Justin Bieber have millions following their every typed insight. Even more impressively, Twitter has played a part in major world events, as users sent breaking news during uprisings in Egypt and Iran and helped volunteers coordinate rescue efforts in Japan.

In a few short years, Twitter has joined Facebook as a social-media leader -- which has left many businesses confused and nervous. Companies know they need a social media strategy. But what exactly are they supposed to do with Twitter?

"Twitter is a useful tool for many small businesses," says Steve King, partner at the small business research and consulting firm Emergent Research and author of the Small Business Labs blog. "We use it most every day, and we have a small business. Having said that, we also think small businesses should not use Twitter just because of the hype -- and there's a lot of Twitter hype."

Drumming up sales through Twitter is no easy task. Consider the numbers: While the vast majority of adult Americans are online to some extent--using email or shopping on Amazon ( AMZN) -- King estimates that less than 8% have Twitter accounts, and less than half of them use the account more than once a month.

"This means only about 4% of adult Americans use Twitter with any regularity," King says. "To be useful as a sales and marketing tool, the customers and/or target market of a small business would need to be in that 4%."

A recent study by Yahoo ( YHOO) Research found that about half of all tweets are generated by just 20,000 "elite" users--celebrities, media organizations and bloggers who have name recognition in their industry. Huge followings are possible, but businesses don't tend to attract them.

If your potential customers are a tech-savvy bunch who tap away regularly on their smartphones, getting them to sign up as followers of your Twitter feed may be relatively easy. But if you want them to actually read your tweets and act on them, you've got to be able to stand out from all the other social media messaging. That means writing clever, pithy comments and keeping your followers engaged. Is there someone at your company willing and able to take on that task?

"The bottom line is that with only 4% of adult Americans using Twitter, it's not a good place for small businesses serving the other 96% of adult Americans," King says. "Even if the customers of small business are active Twitter users, the small business has to weigh the time and effort associated with a Twitter presence versus other options."

Twitter works best as a quick easy to disseminate information. Bars and restaurants can send updated messages about drink specials or new menu items to their regular customers. The gourmet food trucks that have sprung up from Brooklyn to the Bay Area use Twitter to tell customers where they'll be parked next.

Outside the hospitality industry, a more compelling use of Twitter is as a source for information -- by following others' feeds, rather than starting one yourself. Sign up to follow tweets from the leading publications in your industry and its main bloggers and you'll be instantly updated on breaking news and stay up to date on topics affecting your company.

But avoiding Twitter entirely doesn't signal that you're a dinosaur; its features simply might not be relevant or applicable to what you do. "Our advice on Twitter to small businesses is to learn and experiment with it," King says. "Test it for a mix of business purposes, measure your results and use it if you're getting a strong return on investment relative to other uses of your time and money."

In other words, Twitter is simply another potential business tool -- not a magic bullet that will bring customers to your door.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.