Posts Tagged ‘Twitter business model’
Twitter’s business model has been pegged to generate $1.194 billion in revenue in 2016 on net margins of 25 percent, says a new report.
The analysis, published on SharesPost and written by Candlestick Advisors, also predicts $166 million in revenue for Twitter in 2011 and $329 million in 2012, but is dependent on seeing some early success from Twitter’s largely unproven ad platform.
Back in July we reported on how Twitter was a launching a new kind of Promoted Tweet in everybody’s feeds that would start to show ads from brands that you were following.
Well, I guess that wasn’t paying off so well, as Twitter has announced that they will soon begin to show more ads to users on the network, except this time it will be from brands that you don’t follow.
Sites that will be using the @anywhere technology on launch will include:
What, no Facebook?
Not a lot of detail on how this is really going to work, and I can’t quite figure out if it’s going to be much more than the bastardised Twitter widgets a lot of folks are already using on their sites.
Still, there’s perhaps a focus here on targeting users that want to consume information on Twitter far more than they wish to contribute towards it, and this is something I’ve been thinking about a lot of late. It interests me, and it’s an area I feel I might have overlooked (and even dismissed) in the past.
Foolishly so, as there will always be more readers than writers, certainly capable ones – often it’s simply that many of the latter are so loud that our senses are easily fooled. And when it comes to noise, the former bear no responsibility at all.
Twitter plans a Google Adwords-style advertising model, according to All Things Digital.
(Read more at 140char.com.)
Ads will be delivered via searches on Twitter, and come packaged in 140 characters or less, which might present a dilemma for businesses to get their message across. That said, we’ve all had a lot of practice at selling tweets, so advertisers should be at least semi-prepared.
(Imagine how much better this would all be if Twitter searches came with TweetRank? Perhaps the users with the most clout could be linked up to the advertising model and rewarded accordingly.)
This is a bit of a no-brainer for Twitter. I’ve often speculated on the plausibility of an Adwords-style system on the network (using Spotify as a case study) and the most surprising part is that it’s taken this long to implement (and still won’t hit the platform for a few months yet).
It’s really too early to speculate about the consequences of all of this without more information, but I do have one question: will the option to advertise be open to everybody, like it is with Google’s Adsense program, or is Twitter going to continue the form it has shown with the suggested user list and verified users, and only offer this service to their personal favourites?
Like it or not, advertisements are coming to Twitter, and they’re coming soon.
“Twitter will have an advertising business, ready in the near future, and available to partners.” ~ Dick Costolo, Twitter COO.
The company has to make money. Nobody knows how or even where Twitter is going to implement this business model – Robert Scoble speculates it might come in the form of a supertweet – but this was always something of an inevitability. It’s also a bit of a no-brainer – Twitter is becoming so huge, ignoring this opportunity would be more than a little foolish.
But here’s the thing: they have to get it right. This is art as much as it is science or technical wizardry, trying to balance an online advertising model that is effective inasmuch as people see and click on the ads, but not at the expense of millions of others who categorise it as little more than spam. (And Twitter already has some pretty major issues there.)
Google is the benchmark for this, and Facebook has modelled their own advertising system after the Mountain View giant. But both of these have the luxury of the full screen to play with (they’re not limited to 140 characters), and the knowledge that their visitors are coming directly to them, and not viewing a version of their site through any number of external software clients. Whatever ads Twitter supports need to also go out to Seesmic Desktop, TweetDeck, Tweetie, HootSuite et al, otherwise around three-quarters of the user-base will be completely untapped.
And what about disclosure? Does an ad have to clearly be labelled as such? And if so, what does that mean for the tens of thousands of Twitter accounts now that do nothing but link to affiliate schemes and ‘power systems’? Aren’t they ads, too? Or do only official Twitter ads count?
It will also be interesting to see if Twitter allows its users to participate in the revenue stream, like with Google’s Adsense program. After all – if they’re going to be making money off my tweets, shouldn’t I be entitled to a little of that myself? If not, then don’t be surprised to see a Firefox-style AdBlock bolt-on being made available to Twitter users shortly after ads are turned on.
Right, on to the poll. Let’s assume ads are a given – that sooner rather than later, we’ll start to see ads show up somewhere when we use Twitter. I want to hear how you feel about that. Please complete the poll below, and hit the comments to flesh out your thoughts.
My recent article that asked readers how they would react to Twitter announcing a one dollar per month subscription rate raised many interesting responses and questions. At the time of writing, about 63% of voters said they would pay this low subscription rate for a better, more professional service, which for Twitter is, I think, encouraging.
Many readers felt that Twitter would be better if they implemented a premium subscription service on top of the existing free platform. Those who subscribed could receive additional features and tools, such as
- A bigger share of the API
- Spam filters
- A better personal message system
- A way to edit posted tweets
and more. By investing directly into Twitter, we’d be endorsing our confidence in the future of the system, and as a result Twitter could remain independent – the importance of which should not be underestimated – because of the monthly revenue stream.
You’d sign up with a credit card, or pay via system such as Pay Offline. This would allow Twitter to verify everybody with a premium account, and not just celebrities. It would also add credibility to these accounts, because they would be accountable through their lack of anonymity. (You could still tweet under an alias, but because your account had been verified other users would have confidence that you were a real person saying real things.)
A one-time, free trial would be available to those who wanted to taste the premium service, perhaps over 14 days.
Businesses who have many of their employees on Twitter could buy a license, which allowed them to have X accounts (and was perhaps invoiced). Individuals could do this, too. This would be competitively priced, but perhaps businesses would pay a little more, and in return Twitter would group these accounts together in some way.
Otherwise, it would be one credit card per account. This would further eat into the spam problem on Twitter, which mostly exists because it’s easy and free to set up a disposable email address, and therefore easy and free to set up a disposable Twitter account.
And what about those who didn’t want to pay? For these guys (of which I’m sure there would be many), I think Twitter needs to look closely at Spotify‘s business model, and how well their premium subscriptions take off.
Spotify has about six million songs on their database, all of which you can access for free. The catch? You have to listen to the occasional advertisement.
Or, you can pay 99 pence for a one-day, advert-free pass (which is fantastic for parties). Or you can pay Â£9.99 per month, and have full access to Spotify’s premium service, which includes the much-hyped and possibly game-changing mobile access, better sound quality, exclusive access to pre-releases, and absolutely no ads whatsoever.
Much has been made about advertising within Twitter, but the size restrictions on a tweet means that anything punched into there is going to look awkward and feel intrusive. Much better for ads to appear within timelines. I think Twitter could copy Spotify’s model and send one advertisement every 25 tweets (for example) to those who wish to use the service for free.
It might look a bit like this:
(ÃœberTwitter does this now, but only ÃœberTwitter users see the adverts.)
These ads would push out to all the Twitter clients, too, and would work exactly like Google Adwords, scanning your Twitter bio, the things you typically tweet about, trending topics, and the tweets within your timeline, and be as relevant as possible. The goal is, after all, for you to click on them.
Delivering ads based on trending topics alone could be a hugely successful – after all, they are trending for a reason – although Twitter would need to work harder to stop spammers gaming the trending topics feature.
Every 25 tweets might be too often, or it might not be often enough. It might have to be impressions per hour. A little experimentation is in order. Some coding wizardry would also need to be implemented so that ads didn’t just scroll off your screen if you’re following a gazillion people.
Don’t like the ads? Pay your dollar, or whatever rate Twitter decides is fair.
This gives us two monetisation streams for Twitter.
- Subscriptions, and
As with everything else in life, more subs means you can sell more ads. And business needn’t worry too much about those paying customers, because an awful lot of people, and all newcomers, would choose to access the service for free.
I’d also like to see Twitter incorporate Reddit and Facebook’s stance on adverts and let you vote them up or down accordingly, querying your reasons why for the latter. This would further improve the quality of the ads that you see.
And if you decided you no longer wished to pay (or couldn’t pay), you simply dropped back to the free version of Twitter, and lost the extra features. All your tweets, etc, would be unaffected.
All of this means that everybody wins. Twitter wins, because they have a viable business model and two income streams. The users win, because Twitter could remain independent and continue to add features and grow. The power-users win, because they get to pay for a bigger slice of the pie and better stuff. And the casual user wins, because they can continue to access Twitter for the asking price of just a few adverts per day.
If Spotify really takes off, and there’s every indication that it will, Twitter doesn’t need to look much further for a very workable and network-acceptable business plan. It’s all right there, happening in front of our eyes.
I don’t see much of a downside. You?