What Everyone’s Got Wrong About Twitter (Including Twitter)

If the New Yorker says Twitter is cooked, then it has to be true, right?

Actually, it’s wrong. As are most analysts — and Twitter itself, if we’re being honest.

Twitter is going through what many modern companies go through: An identity crisis.

Any modern company whose lead business model is “advertising” has to decide what kind of company it is. That choice — inevitably between “data-led media company” and “media-led data company” — determines the expectations that users, employees and investors will have about the company, and should guide each and every decision it makes. Companies that make the most of this decision maximize their values.

So what’s the difference, and which one should Twitter be?

The data-led media company sells access to its audience members, providing an opportunity to reach or engage them in a meaningful way. The intelligent usage of data to improve advertising performance is critical to being able to charge advertisers more for ads.

Vice and Snapchat, though very different, are two examples of data-led media companies. They reach increasingly hard-to-find audiences, and have brands that advertisers are willing to pay a premium to be associated with.

A modern publisher, Vice has figured out that the distribution game is more important than the traffic game, and most of the audiences it reaches are actually via platforms, not its owned media properties. Vice is successfully leveraging data to distribute sponsored content effectively and efficiently.

Snapchat is a pure platform. It controls the distribution of content on itself, and charges publishers (and brands) to get access to its users. Its value lies in how much of a particular audience it reaches.

But even though these companies are fundamentally different, they are both in the media space. Vice knows that it is a media brand. Snapchat is one, too (you can tell by the billboards). They both have outspoken media personalities as leaders. And both companies’ values lie not only in their ability to maintain relevance to their audiences, but increase those audiences’ sizes (see Vice’s expansion into TV as an example).

Media companies are constantly under pressure to grow the size of their audiences, as that represents the scalability potential of their business. Many do incredibly well against particular segments, and they can charge a premium for that, but some tend to have trouble scaling when they are focused on audience growth at any cost. Their audience-growth expectations become too big for their britches.

When you look at modern data-led media companies’ valuations, either private or public, they are commensurate with audience growth, which is commensurate with revenue growth. If we go back to Twitter, we can see the market routinely penalizing the company for not growing to expectations.

But maybe that’s the wrong key performance indicator for Twitter to focus on. Maybe Twitter isn’t a data-driven media company, but something else.

When Twitter launched Moments (essentially a Snapchat “Stories” clone) with TV spots during the World Series, many critics yawned, and the market responded by sending the stock downward.

The next stock-price bump? Twitter announced it would allow advertisers to reach logged-out users. This signals that Twitter’s stock price will be rewarded as they continue to find new ways to monetize their users’ data — not just their users. Nothing scales like being able to sell and resell valuable data to advertisers. Twitter’s challenge is that too much of its data is used to target users on its own platform.

Facebook figured out that the future of the company’s revenue growth will depend on how portable it can make its data. It has been rewarded many times over for its acquisition of Atlas, enabling it to serve ads throughout the Internet, not just on its platform. The data created by Facebook users (and there are nearly 1.6 billion of them) is incredibly valuable because no other source of data knows as much about what its users like (or at least want people to think they do).

Twitter is a platform unlike any other, in that it has enough real-time data and intelligence that can be mapped against over 300 million active users. These users are more likely to be more influential and use other media concurrently (especially TV).

Therefore, a compelling argument can be made that, if used properly, Twitter’s real-time user behavior and media-consumption data can be among the most valuable consumer data. In most cases, advertisers will be willing to pay a premium for that. But because so many scrutinize Twitter’s ad experience, doubts abound.

There’s a lot of talk from people who want Twitter to open up its APIs again. I think they’re half-right.

If Twitter wants to realize its full potential, it will make its data completely portable for advertisers, becoming the primary source for real-time business and consumer intelligence. It will use its (and its users’) media savviness to feed a global dataset that ad exchanges, app developers, advertisers and corporations will pay increasingly large amounts of money to access, making it a media-led data company. It has already displayed success in this area; the Twitter Audience Platform and MoPub have gained traction, and with Facebook’s Parse shutting down, Twitter’s Fabric toolkit should gain traction with third-party app developers, as well.

A reduction on pressure for user growth will enable product teams to focus on enhancing user experience rather than ad revenue. Steady improvements to Twitter’s user experience will result in natural user growth, as long as growth expectations are managed. This is a job made easier if Twitter is disproportionately scaling revenue as a result of data portability.

Most media companies and platforms are forced to choose from these two paths early, either by investors or through an exploration of strengths and weaknesses in their business models.

Twitter has been straddling this path for years. Now it’s time to choose.

Ian Schafer is the founder and chairman of Deep Focus, an award-winning global agency lauded for its expertise and excellence in digitally led creative execution and media strategy, innovative agency operational models and consumer insights that drive engaging, value-driven experiences. Schafer previously served as vice president of new media at Disney’s Miramax Films. Reach him @ischafer.

This article originally appeared on Recode.net.