Editor’s note: The guest post below was written by Brian Lawe, CEO and Founder of MyStoreCredit. Brian’s company develops e-commerce tools around payments, cross-promotion and customer mapping. He’s been watching Twitter for some time.
The rumors are ripe that Apple, Microsoft, Google and News Corp are all sniffing around Twitter – but no one has mentioned the best fit: Amazon. If Amazon doesn’t jump into the arena, someone at Twitter ought to make a call to Jeff Bezos. Neither Amazon nor Twitter should miss the powerful synergies from merging the two companies. To wit:
- Introducing Twitter Payments: Amazon has been struggling to gain traction with its payments platform. They will never unseat or even threaten PayPal until they come up with a unique and differentiated strategy. The world does not need yet another payment option. But Twitter is something new and does offer a smart strategy. By rewarding Twitter users for associating their Twitter accounts with their Amazon account, Amazon can instantly create a new, potentially dominating powerhouse in payments for mobile and online transactions.
- Using Twitter as the base, builds on PayPal’s model of making payments easy by letting users pay just by entering their Twitter ID – which would be the same as their Amazon Payments ID. If Amazon Payments can seize this deal and execute a launch of “Twitter Payments,” the net result could make Amazon/Twitter Payments a real threat to PayPal and a real payments choice for users.
- One of the least-understood benefits of tightly tying PayPal to eBay transactions is the resulting free promotion PayPal gets being front-and-center in all eBay transactions. Visa or Mastercard would have to pay millions and millions to get that kind of preferred-positioning in a transaction. By linking Amazon Payments to Twitter accounts – Amazon could get the same preferred position for ALL mobile payments – all at no cost. Smart money puts PayPal’s current valuation at $8-12 billion. Not a bad return if Amazon bought Twitter for $700 million.
- PS: While Google has a payments platform – it is structurally different from Amazon Payments and it would not benefit from the same synergies with Twitter. Google’s payment service is more like a credit card consolidation service vs. a true payments platform.
- Amazon’s recommendation engine is suited for 140 characters: Twitter has an albatross: No obvious business model has emerged for Twitter and none seems evident to justify a $100 million (let alone $700 million) valuation. Google has taught the world that over-paying for a hot media property (Youtube) solely based on “users” is a dumb move. Hulu took some time in coming on, but it proves the case that any hot new media isn’t immune to competition forever. Which means Twitter will have to offer a sustainable business model to pay-back its buyer. Which brings us to Amazon’s unique ability to capitalize on Twitter’s highly restricted media medium.
- What could any advertiser possibly do with a service that constrains itself to only 140 characters? Unless you are a copy-writer, you can’t comprehend how difficult it is to promote something in just 140 characters!
- Enter Amazon’s recommendation engine. Tweet “Amazon’s recommendations 4 u:” and you still have 111 characters to describe a book, movie, song, toy or any other item sold on Amazon. The 140 characters alone are highly constraining. In this case, the medium is most definitely not the message. The message has to be the message. And the message has to be extremely targeted.
- You can’t target a 140 character message unless you know a whole hell of a lot about the recipient. Amazon alone is the best player to use its database of shopping history to create highly targeted 140 character messages to Twitter users. Imagine if Amazon offered a $5.00 coupon to any Amazon buyer who registers their Twitter account on Amazon? Once the two are linked—game over.
- My thinking assumes ultimately someone will have to pay the piper for the “free” twitter service and twitter-approved ads make the best sense. If that is ultimately true and an ad-driven model emerges, then the restriction of the 140 characters is a huge constraint which can only be overcome with highly-effective cross-merchandising (which only Amazon does effectively at scale).
- Among the current named suitors, only Apple is also similarly situated to utilize the character limitation to highly cross-promote. But what can it cross-promote? Songs? An average song is only $0.99. Compare this low price item to Amazon’s ability to promote any product at any time. Amazon can use the same 140 characters to promote $5, $50 or $500 items. Think of it this way: If Apple was equally successful at cross-promoting a $0.99 song as Amazon might be at cross-promoting a child’s toy for $50 – the profit value Amazon would capture in the same promotion and for the same tweet would be 10-50x better than what Apple could capture.
- Amazon could best control the brand marketing experience: Twitter users are not going to sit by passively letting a new owner test formats forever. If they feel spammed, they’ll turn and run from Twitter. There is risk that any new owner could destroy the Twitter brand by over-testing or probing for a promotion model to make a Twitter acquisition pay off. But Amazon has a core-strength in doing this. Amazon is renowned for its ability to test creative and GUI’s and measuring sales results. Top that off with Amazon’s “one-click” to buy patent — and you just made mobile buying as easy and comfortable as apple pie.
- Amazon needs to take some risks. Amazon’s recent results relative to its arch-rival eBay are impressive. One lesson Amazon can take from eBay’s missteps is the need to invest in new ideas before your existing model begins to gentrify. Clearly, mobile and social are two huge areas where Amazon should be looking to play. Twitter gets them into both games. Amazon does run the risk, as eBay did with Skype, of choosing the wrong horse to ride. But given the threat of losing Twitter to other players who will then control promotion and marketing access to mobile users, this is one bet Amazon ought to take today.
Twitter needs a revenue model. Like democracy, the one I propose is the worst—except for all others. I wish the Twitter folks all the best in their decisions in the days ahead. But if Amazon doesn’t step-up to the plate now—and with a very big bat—they will have missed one hell of an opportunity.
Amazon? Come on, is that a joke? Ads limited to 140 chars are too short? Have you heard of Google? Get real.
Is:
Twitter (poor performance) vs. Facebook (stellar performance)
…just:
Rails vs. PHP
…writ large?
Is Rails a relgion, but PHP tool to build both ugly & beautiful stuff with? Just askin’.
I must say though, the same thing could happen with Apple. Linking twitter through itunes store, along with mobileme accounts could mean great things for apple. Notifications of new trailers, albums, tv shows, and the like directly into peoples pockets. Twitter coupled with apples recommendations technologies could be powerful.
The possibilities for apple, i believe are even bigger, especially considering that amazon are not globally successful. Being in Australia, i have never used amazon in my life, however the itunes music store has taken off worldwide, and an acquisition such as twitter wouldn’t be a bad investment, and one that would most likely pay off for them. As long as they didn’t screw it up.
tl;dr (most of it)
sorry if it sounds too snob, but this article looks very lame
Actually, Bezos invested in Twitter so I’m pretty sure he knows about them and what is going on.
Why is this posted?? Just a small bit of code needed to bolt on a simple, little payments system to Twitter’s often struggling infrastructure
I’m sure everyone would enjoy having ad Tweets in their feeds coming from Amazon. How was Beacon spelled?? It’s all so simple. Apple should buy Twitter, Google should buy Twitter, Ebay should buy Skype (oops, we know how that worked out).
Knitting. Stick to it.
What a joke.
You know jeff bezos/bezos expeditions is an early investor in twitter right?
You know jeff bezos/bezos expeditions is an early investor in twitter,right? (sorry if this posted twice, comcast just went back up)
Jesus can you guys talk about something else other than Twitter ALL the time? Even when there isn’t a Twitter story you just resort to making crap up. I love Tech Crunch but the incessant Twitter Pimping is out of control. It’s why I stopped reading Mashable. Now you guys have taken up the the mantel. It’s like there’s only 2 sites on the web worth talking about Twitter and Facebook.
This was certainly a very poorly thought article. None of the arguments made much sense either.
Forget Twitter. Amazon should buy Palm and Sprint. They could come out with a whole line of Zon phones and provide the great customer service that Sprint does not really seem to get. They would be killing so many birds with stones from under one roof.
I love when stories are written by the “guest retard”. Twitter this, Twitter that. You know there are other start-ups out there, don’t you?
Not in mashable or techcrun world
Last time Amazon bought the most kick-ass social network tool ever invented, they took the code they wanted and left the rest to die. For those of you who don’t remember, PlanetAll was a web app *way* ahead of its time. It was a combination of TripIt and Plaxo (the address book sharing piece at any rate). It was bought by Amazon in 1998. It was shut down less than two years. There’s no reason think they wouldn’t do the same thing to Twitter.
To see the sad story of its demise, check out the Wikipedia entry for PlanetAll at http://en.wikip.../wiki/PlanetAll
You missed one crucial reason:
Amazon is selling exactly the things people are twittering about.
People are twittering about a movie that they are watching, a book they’re reading, a cd they bought, etc etc..
Here is an example:
“Just finished watching the Oscar awarded movie slum dog millionaire”
Every follower of mine will see that, and become a potential client (people tend to buy what their friends are buying)
Clicking on the movie name, will redirect him to the Movie’s DVD item page in Amazon.
This is sufficient business model, all the rest is not important.
sorry to tell you… a lot of people don’t buy what their friends are buying…
if it were really this simple… facebook would have revenues worth a mint…
peace
You’ve heard of “Word of mouth” and “Viral” marketing? Not everyone buys what their friends buy, but they certainly value a friend’s opinion and product suggestion!
ff
You’re gotta be kidding. This is a terrible idea.
Twitter knows nothing about payments processing — they have never taken a credit card in the history of their company. Heck, they can barely manage to get a DM into the right inbox.
It would be a terrible acquisition for Amazon because their businesses are nothing alike. Amazon makes money from selling stuff. Twitters best hope for revenue is through search advertising — which makes them a good fit for Google or Microsoft and that’s it.
UGH!!! Bloggers are being brain dead this evening.
First it was Apple buying Twitter, now its Amazon being the best fit. Both people could just build something themselves in house based on what the authors of the respective pieces are justifying.
Why spend north of 700 Million for that? Doesn’t anyone think anymore? You commercialize twitter to that extent and its dead!
Sigh. You know what? I’m going to bed early tonight, there’s no way I can read another tech entry in google reader without killing myself. I’m chalking it up to the midweek blues by these writers. Hopefully tomorrow will be better.
Best Comment Ever.
“…there’s no way I can read another tech entry in google reader without killing myself”
I feel like that all the time.
well despite the negative responses, i will admit that i have been saying amazon should aquire twitter (if twitter is open to being aquired) for about a year. bezos is already invested, amazon can afford to take the risk and i think it can only be useful, not a hindrance nor challenge to make it a solid investment.
i dont read techcrunch enough to be annoyed by incessant twitter posts so i lack that immediate bias against this post. i have been planning a similar post myself actually.
Twitter can’t be monetized anymore than email or instant messaging, it’s a method of communication, nothing more, nothing less.
Why would Apple or Amazon have any particular use for it?
idk but amazon isnt suited for 140 character. i have never bought a product with such a short review in my life. i can bet the bank if you presented someone looking to buy a digital camcorder with 140 review you would get decrease sales. folks shopping want details not quick 140 reviews.
You forgot another potential source of revenue for Amazon: fail whale t-shirts!!
Justifications Justifications
This is another thread to ‘hype’ up the Twitter valuation. Twitter with its less than 20M user base (& 40% quitters) has to go a long way to meet up Facebook’s 200Mn.
Twitter’s got an exponential growth, how long it will last – time will prove.
For this article:
1. Twitters Payments? Amazon has rich user base of users who seem to well know its checkout. Need for Amazon to get an seperate twitter payment module which would be used by small set (at the max 2-3%) of twitter users is an “Question?”
2. Paypal payment method is popular because of its seam-less integration with 1000s of independent transaction websites. An overlap between the users/publishers of these sites and twitter is questionable., and to what extent would threaten Paypal can be debated without reaching conclusion.
3. Instead of buying Twitter for 700Mn USD, I would recommend Amazon to spend an 70,000 USD and create an application on Twitter with payment authentication. The ROI would be much better compared on 70K USD investment over a 700Mn USD.
4. Out of context to Twitter payments. Google is yet to move the market with this Checkout solution.
5. This goes without question. What will Twitter return to the acquirer for 700 Mn USD? Just users that tweet… let them continue doing so in Twitter.
6. Twitter is yet struggling to come with an advertising or revenue model.
7. Little scope why the recommendation should be tweeted. It makes sense only if the system tweets the books which user would be interested in – but wouldn’t that be too much spam – if without context?
8. Whats the point in giving $5.00 coupon to register for a service that is free. Amazon can very well pass on the benefit to existing users or waive off shipping.
9. Does not justify with the above statements made about the recommendations or cross-sell.
10. Spam, Spam and more spam.
11. Lol
12. Why take a risk for $700 Mn USD that doesnt fit the portfolio. Amazon can use this money probably in investing in new regions where it does not exist and have immense future potentials – new markets in Europe, Asia.
Apparently from the ridiculous number of articles here about Twitter, Twitter already owns TechCrunch.
True!
And Mashable
Absolutely!
Rumors can be _rife_, but not _ripe_.
All 12 points are as weak as Ricky Hatton’s chin
It would make sense for Amazon to buy a strategic stake in Twitter at a reasonable price and give them a cut of the revenues it generates through the service.
Thanks for the article – I enjoyed reading this guest post. Some thought provoking ideas on monetization. Very unlikely a deal like this would go ahead, but interesting all the same.
- Amazon is a world wide company with a brand name.
- Twitter is still very local (of course the Bay Area is the world) and no big brand name.
A payment service and the Fail Whale go very well together: you would complain immediately.
“Twitter is still very local.”
Based on what? Last I checked there were Twitter users all over the world. In my “following” list alone, I have representatives from Germany, Canada, Thailand, Japan, UK, Switzerland, Sweden, Portugal, Israel, and more.
In fact, I think I follow people in every country in which Amazon has an International presence. (http://www.amaz...mp;docId=487250) Except maybe China, but I’m guessing the managers of the Great Firewall aren’t all that keen on Twitter.
I like some of the thinking in this post but I do have some concerns:
1. Giving how open Twitter is and how many Twitter Apps out their have tons of Twitter users’ login credentials, would people really be comfortable using their Twitter IDs for payments?
2. Security aside, would Amazon really need to buy Twitter in order to enable people to login to Amazon Payments with their Twitter IDs? I may be wrong but isn’t this what OAuth, OpenID etc are about? I don’t pay much attention to this topic so I may be completely wrong here.
3. Finally, for the recommendations part, couldn’t Amazon just create a Twitter app, set up a Twitter account, and have people log in once with their Twitter and Amazon logins to follow “Amazon Recommends” and get regular recommendations in the form of Tweets? Would cost a heck of a lot less than 700 million I imagine.
How many more ‘why xxx corporate giant should buy twitter’ posts should we expect before the week is done?
I have dreams at night where I’m using Twitter on a television, and I don’t even own a television.
When I visit friends who have cable, it seems that cable TV is talking about Twitter as much as TechCrunch. Time-Warner has a serious crush on Twitter: Twitter really is what CNN Headline News wants to be.
I expect Twitter to be acquired by a television conglomerate, for it to be integrated heavily with devices (cable boxes) and for it to play a large role in programming people’s media experiences.
As much as the rumor mill is pushing the Twitter acquisition story, it flies in the face of common sense.
http://pacificg...ot-twitter.html
Apple is NOT eBay.
I don’t understand why any one of MS, Google or Amazon would drown anymore than a few million dollars in Twitter. My reasons -
1. None of these companies should care about twitter as a brand.
2. None of these companies should care if Ashton Kutcher tweets and he has a million followers.
3. The only things they would be interested in will be the IP and the traffic that twitter-acquisition can provide. Now, this cannot surely be valued as high as $700 mn.
For once, if any of these companies are looking to build something like twitter (only more robust and scalable), it should not take them more than a few months. They have all the building blocks with them.
Twitter should go at it alone for as long as possible. There’s enough brain power and traction in that venture to make it all work. Not to mention that acquisitions in web tech hardly ever work out for anyone other than the founders, and I think these guys are in it for the long haul, not the flip. -Sarah