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Sphinn Home » Social Media
The Trouble with Twitter
Social Media News Source: http://www.businessweek.com
Published: Aug 21, 2008 - 11:07 am
Story Found By: NickWilsdon 1271 Days ago
Category: Social Media
Don’t be surprised to see advertising on Twitter soon. It’s about the only way the service can generate revenue. But will it be enough? Insightful article by Ben Kunz at BusinessWeek.
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from Ruud 1269 Days ago #
Votes: 0

I don’t see how they would do ads in regard to the API. Insert an ad every x messages?Honestly, twitter is one of the rare services I’m willing to pay (a little bit) for

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from NickWilsdon 1269 Days ago #
Votes: 1

@RuudInserting ads every X number of messages is one of the suggested monetizing methods in the article. It was also suggested by Jason Calacanis earlier this year. I’m not convinced it would work though. The response to Twitters last attempt with Adsense was very negative. 43% of Technorati users voted that Twitter should not have *any* advertising. This is a big issue. How to monetise these kinds of projects. As the article wrote, the "real" value of advertising is much lower than the hype price. Even then, the audience dislikes adverts and is now used to getting these services for free. It’s going to take a lot of work to turn that around. JC sums up the attitude of many entrepreneurs - "it’s all about the audience numbers not the revenue model". To me that reeks of the old Web 1.0 saying, "it’s all about the eyeballs". That ended quite badly and makes me wonder how far we are already into Bubble 2.0.It’s a good point that many of these services can communicate with each other now, thanks to the Web 2.0. emphasis on data portability and XML. If one service starts charging, what is to stop another, rich with VC funds, grabbing that audience? They could even strip out any advertising on the incoming feed.

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from LtDraper 1269 Days ago #
Votes: 0

I went through and analyzed every business mode I could think of and what I’ve read from other people.  They just can’t bring in enough revenue to justify the amount of VC money they’ve taken. Look for the VCs to pull the trigger on a fire sale.  http://sphinn.com/story/67155

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from BrettBorders 1269 Days ago #
Votes: 0

Twitter is like AOL... bloaty, unreliable, un-innovative software for n00bs. Filling up fast with spam. Advertising won’t make it any sweeter for me. :(

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from LtDraper 1269 Days ago #
Votes: 0

@NickWilsdon - Why would it have to be another startup that starts to compete with them?  There’s not enough IP in Twitter to justify a purchase for Google, Yahoo, MS, etc, at anything other than fire sale prices, but that doesn’t mean they couldn’t integrate a free version into their product set that they built themselves.

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from NickWilsdon 1269 Days ago #
Votes: 1

@LtDraperWell you can say that about a lot of the new wave of applications. None of them have significant IP in the code to make them worth a buyout. Look at RuTube.ru in Russia, why buy out the competition when you can recreate the platform? This new generation of apps are just too easy to reproduce, there’s no substance to them. Twitter can be reproduced by a couple of Russian programmers in a weekend - check out mblogi or SMSter. How about a Chinese version?This point also seemed to be rammed home by Google walking away from the Digg.com talks recently. All these applications have are the audience numbers. That is what people are buying. Problem is we’re fickle. What’s cool today maybe out of fashion tomorrow and one factor that will make us jump is having advertising forced on us. These apps have really got themselves stuck up a creak without a paddle. My comment on another startup competing with them was referring to the data portability. As all these apps allow free flow of data, it’s easy enough for another app to steal the audience. Take these new social aggregators (FriendFeed, SocialThing etc) - once you start using them to blog to different services they have effectively stolen the eyeballs/visitors/page views. I agree with you though. The likely senerio is that Jaiku, backed by Google takes control of the microblogging environment. They are the only people who can really scale this. It will kill off a lot of emerging businesses though which must be a worry for them on the PR front.

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from Fitz 1268 Days ago #
Votes: 0

Or they will just have "business" twitter accounts pay a rate based on how many subscribers they have. That model was mentioned about a month ago and is truely revolutionary. Imagine advertisers only paying for eyeballs that actually subscribe and want to see their tweets?! Personally I follow a handful of "business" twitter accounts now like news sources, woot, ESPN, some startups, TV shows, etc. And I’m legitimately interested in them and what they are offering... so what’s that worth to an advertiser?So I wouldn’t count Twitter out.

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from yojpotter2 1268 Days ago #
Votes: -1

I’m just afraid this might worsen Twitter’s problem with their servers.

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from LtDraper 1268 Days ago #
Votes: 1

@Fitz - the problem with revolutionary business models is that you have to evangelize.  While twitter could add banner ads to their site and just piggyback onto the well developed market and mechanisms for delivering that kind of advertising, the exotic ad methods that people are suggesting don’t have any infrastructure to support them.  Getting Coca-Cola to buy sponsorship becomes a corporate sale.  Twitter would need marketing, sales teams, proposals, etc to be able to sell that kind of program.  That’s way outside of the skill set that they’ve demonstrated that they have.  $15M is not enough to get the job done.Barack Obama leads with 60K+ followers on Twitter.  How many corporate brands are going to attract that much attention?  How much is it worth to send someone a 140-character tweet?  If it’s worth 1 cent per user/day, that’s only $219K/year in revenue.  Your sales cost in going after an account like that is easily $50K.  And you’re going to spend money chasing a lot of accounts that aren’t going to work out.  Or do you charge just for click throughs?  What is the conversion rate on tweets?  Heck, I miss a lot of tweets from people I want to hear from, much less corporate advertising.  And the more corporate sponsorships you sell, the less they’re each worth.  And frankly, what corporate type in his right mind would stick his neck out and write a check for $200K to a startup that hasn’t yet figured out how to make money?  Getting those first accounts is going to be quite difficult.  It’s not like Twitter has an experienced team to execute on all these ideas.There are a lot of pie in the sky ideas about how Twitter can make money, but I have yet to see anything that will stand up to financial analysis.  Twitter has $15M in venture capital.  That’s not nearly enough to build 7 different revenue streams, none of which have been successfully implemented before.As much as I’d like Twitter to be a success, they’re partying like it’s 1999.

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from Fitz 1268 Days ago #
Votes: 0

@LtDraper - You bring up some excellent points. Obviously you have more knowledge about this type of an endevor. I just tend to think you are thinking too "inside the box". Personally, I don’t think Coca Cola would even be worth following on twitter; what are they going to tell me that I care about? But alternatively, I think a platform like twitter could be easily tweeked for small local businesses to post about daily specials or sales going on. And with a few mods perhaps the info small businesses post could be requested via a mobile phone by txtin a keyword or zipcode to twitter. And maybe since small businesses don’t have huge budgets they could just have a monthly subscription fee.Point is, whatever they decide, I think the potential is there; you just have to be willing to think outside the box...

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from NickWilsdon 1267 Days ago #
Votes: 0

@FitzThe two methods of monetizing Twitter has tried to date are clumsy adsense and banner placement. We’ve not exactly had an awe inspiring show of "outside the box" thinking from the team over there. I agree that new models need innovative revenue streams but are they capable of coming up with these? Or putting enough of that VC money and priority behind doing that? I guess we’ll see if the economy tightens and more of these projects have to think about the bottom line.    

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