Market Talk

Twitter’s exponential growth has received a ton of press lately. But a new study shows many of those folks experimenting with the site don’t actually come back.

The microblogging service’s website generates 6M unique viewers a month. But Nielsen Online says 60% of Twitter.com’s users leave the site the following month, meaning Twitter retains less than half of its new users.

“Twitter has enjoyed a nice ride over the last few months,” says David Martin, the VP of primary research at Nielsen Online. “But it will not be able to sustain its meteoric rise without establishing a higher level of user loyalty.”

Twitter’s 40% retention rate limits the site’s growth to only about 10%, Martin says. That rate also sits way below the 80% retention rates that Facebook and News Corp.’s (NWS) MySpace experienced when they were emerging networks. Now, both social network sites sit at about 70% of users.

“To be clear, a high retention rate doesn’t guarantee a massive audience, but it is a prerequisite,” Martin says. “There simply aren’t enough new users to make up for defecting ones after a certain point.”

Peter Kafka at MediaMemo says it isn’t surprising people are quick to give up tweeting.

“Twitter is easy to use, but it often takes a while to make sense, and if you’re not a professional self-promoter — or someone with a lot of friends who are already on Twitter — it may never make sense,” he says.

But BuzzMachine blogger Jeff Jarvis highlighted in a post today a perfect example of Twitter’s value to society. Jarvis said he was on Amtrak today from NY to DC when his train was delayed because of a water-main break in Baltimore. 

He naturally went to Twitter to see if anyone on the train was tweeting about the experience. Sure enough, he found someone on the train who was then able to give him a lift to DC. 

“I had a fast and free ride and good conversation,” he says. “A disaster turned into a great experience thanks to Twitter. Now ain’t that amazing?”

Nevertheless, if this negative trend of people quickly leaving the microblogging service continues, it’ll be “mathematically impossible” for Twitter to achieve real traction and gain a large percentage of Internet users, Kafka says.

And that certainly doesn’t bode well for Twitter if it’s looking to get a deal done in the future.

“A lot of the Twitter sales pitch — to investors and would-be partners like Google (GOOG) and Microsoft (MSFT) — is contingent on the service’s eventual ubiquity,” Kafka says. But “knowing that growth is capped could make that impressive hockey stick chart a little less so.”