Twitter, Snapchat: Redesigns and risks go hand in hand

Social-media runners up Twitter (TWTR) and Snapchat (SNAP) are retooling their platforms in hopes of reinvigorating user growth and keeping some semblance of pace with goliath Facebook (FB).

Twitter has doubled its character limit for tweets to 280 characters, and Snapchat is promising a design overhaul that makes its platform easier to use. Both moves aim to expand the services’ appeal beyond core users and draw larger audiences.

Change is constant and a given for social platforms, but every tweak carries risks. Facebook has been a master of evolution, and its recent adjustments to Instagram are eating the lunch of Snapchat in particular.

The question for battle-scarred investors in Twitter and Snapchat: Will the platforms remain compelling niche offerings, or can they grow and become more mainstream? Will their latest moves be enough to turn around the business fortunes of the social platforms, whose shares each are trading at around half their initial offering price?

Services like Twitter and Snapchat gained favor because they were different from the incumbent powerhouse Facebook: Twitter enabled the broadcast of short messages without requiring two-way interaction, while Snapchat allowed millennials to share their lives with those closest to them without the pressure of gaining shares and likes, noted Koen Pauwels, a professor of marketing at the D’Amore-McKim School of Business at Northeastern University.

“Over time, however, these new services aim to grow their customer base by emulating key features of the legacy firms,” Pauwels explained in an email to CBS MoneyWatch. “These changes may indeed attract new customers and increase usage of current customers. However, they also reduce the uniqueness and raison d’etre of Twitter and Snapchat.”

He compared the phenomenon to the so-called “wheel of retailing,” whereby rock-bottom discount retailers, once firmly established, try to boost prices and move upmarket to capture higher margins.

“The danger for Twitter and…

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