How is Twitter going to make money?
One question which has been lingering in all our minds for quite a good time is ‘How is Twitter going to make money’? The COO of Twitter Dick Costolo revealed that Twitter will be launching an advertising business in the near future and also mentioned some of the other possible revenue streams for this hugely popular microblogging service which boasts of millions of users. This is the first time that an authoritative person from the Twitter HQ has spoken about the revenue model of Twitter putting an end to all the speculations.
As an end user we hate to see the ads right? But if they are implemented in an intelligent way in a complementing manner then it would definitely be a nice value addition from an user perspective. Now that we know for sure that Twitter is going to do advertising but it has kindled up more questions than answers. The biggest of the lot is how exactly is Twitter going to implement the ads in a way which doesn’t annoy the users and at the same time provides value to the advertisers.
Having plain old CPC/CPM based text and image ads will definitely not be the right thing and we know for sure that the intelligent team at Twitter didn’t wait this long to have a advertising model like that.
Advertising Model?
Dick Costolo has mentioned that it will have nothing to do with the new Retweet feature and so we can stop thinking from that point of view. Having ads between Tweets is something which most of us wouldn’t love to see but there are a handful of companies doing it currently. Ad.ly and SponsoredTweets.com are two notable companies which are doing pretty good in the in-stream advertising arena. With celebrities charging a 5 digit amount for posting a single ad tweet, it looks pretty lucrative. Twitter might very well kick these players out of this game and do it on their own.
Twitter also introduced the new geotagging API and this will allow users to add location coordinates to their tweets. It will definitely make the twitter search feature rich but more importantly it gives a nice playground for Twitter to experiment location based advertising. Imagine a situation where you tweet about a restaurant and an ad shows up which gives you a discount code which you can use while paying the bill or may be provide offers to the restaurants near by (like FourSquare). It will be a ‘win-win-win’ situation for the user, the restaurant and Twitter as a company.
SuperTweet
Robert Scoble wrote about SuperTweet wherein ads are presented to the user based on the metadata harvested from the tweet. Implementing it in an unobtrusive way will be the biggest challenge if Twitter plans to go ahead with a model similar to SuperTweet.
API Access
There are hundreds of third party apps which make use of the Twitter API. Currently Twitter imposes a restriction on the number of API requests per hour. There are already a few apps which pay Twitter to gain extended access. Twitter is also planning to make money by providing service level agreements where priority and access guarantee will be provided to the interested parties. This will be a big boon to the companies who have paying clients using their twitter API based apps, web clients etc
Premium Accounts
It is well known that many companies use Twitter as a marketing/customer support tool. Dell drove over $2 million sales via Twitter, JetBlue uses it for customer service, Starbucks posts new offers and there are many other big brands which get a lot of value out of Twitter. By the end of this year Twitter will be launching corporate/premium accounts which will provide enhanced analytics and other features which business might find useful.
Glad that Twitter is gonna make some real money!
Image Credit: RandomAnimal.org
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It sounds unfair to kick those celeb users away from twitter, but may be twitter could take a cut.
Correction: Dell made 3 Million on twitter. Source: techcrunch
@bharadwaj
I meant Twitter could blacklist the companies like ad.ly and sponsoredtweets from putting up ads on the timeline.
It will definitely be a good revenue stream if Twitter monopolizes it.
“”As an end user we hate to see the ads right? But if they are implemented in an intelligent way in a complementing manner then it would definitely be a nice value addition from an user perspective.”"
Why bother hate to see ads? Nobody can buy anything, unless somebody is selling something. Intelligent, complementing manner is not necessarily going to get results for both the advertiser, nor the end user. Ads must speak to the user, and provide value. HOW that is accomplished may or may not be complementing; but so what? If the ads provides the end user a real value for their dollar and the advertiser gets business, where oh where is the problem?
Monica
[...] wondering for long about how Twitter is going to make money, we did learn from many sources that Twitter was indeed profitable for this calender year. Thanks [...]