Biz Stone, in a blog post today, gave us a little insight into Twitter’s stance on advertising. There’s been a lot of speculation on how Twitter should and could advertise but Stone lays out a few ways where Twitter could monetize via ads and other methods and notes that the micro-blogging service would prefer to stay away from relying too much on ads, at least initially.
First, Stone says that Twitter sees the inherent value of commercial use of twitter, noting that Twitter is providing enterprises and individuals with viable uses that could be enhanced. Last summer, Twitter CEO Evan Williams said he thought Twitter’s strongest revenue potential would come from charging for commercial use by brands. Other initial ideas for ways to commercialize Twitter include “account authentication, management tools, and discovery mechanisms.” Stone doesn’t find the idea of selling banner ads on Twitter very compelling, but acknowledges the marketing value of twitter in connecting businesses to consumers and is looking to explore this particular avenue.
The best discovery mechanism is search and the obvious business model in search is advertising. But Twitter doesn’t have to make money yet, so it is not ready to commit to a revenue model and clearly wants to take the time find its own way and strategy. The startup knows that it can make money with advertising if it needs to but continues to experiment with different advertising strategies to find the model that’s the best fit. Some of these “tests” include text advertisements on the home page, ads in the stream, and text footer ads. Twitter also serves ads in the small box on profile pages for third-party Twitter apps, but doesn’t seem to charge the apps for the promotion.
Since, twitter has got the funds from VC’s they are not looking for ways to monetize, if not you would have seen the implementations instantly
having funding doesn’t mean you can go without revenue indefinitely. But they surely have the luxury to build the user base while they’re thinking about the best ways to monetize.
Its called a stall tactic in preperation for a buyout. Keep talking about how you’ve got great ideas for revenue.. don’t implement them .. thats a sure fire way to lower your valuation being they rarely go as planned. Let the acquiring company figure that out.
References: Every web 2.0 company in existance.
They plan to have Promotional accounts … atleast thats what they said at TieCon last weekend …..
http://socialap...nd-of-the-year/
not really smart move. i liked fb from beginning that it gives ads, like it means business – not hype. Unless display ads blink/animate, they are good. And people actually like ads.
lol you got it right.
@ Nick I disagree. I think twitter really has potential
for a good revenue model. I had written about it here a few weeks ago: http://tinyurl.com/cusflr
“Biz Stone, in a blog post today, gave us a little insight into Twitter’s stance on advertising.”
hey TC, you don’t need any insight, you are the official advertising agency for twitter
who’s gonna pay when there is free advertising allover?
Twitter is the perfect real-world recommendation engine. If they can tap that potential they won’t have to worry about revenue. Lot’s of good ideas come to mind.
they will have ads eventually
Yes, it is just a matter of timing for them. I’m sure they have given this more thought than people think.
“But Twitter doesn’t have to make money yet, so it is not ready to commit to a revenue model and clearly wants to take the time find its own way and strategy…”
Where have I heard that before? Oh yeah, in the early press releases of all the companies in the TechCrunch Deadpool.
All the companies that weren’t acquired that is.
Its a gamble.
If Twitter is singing the same tune a year from now I will be quite surprised
Twitter could get some extra cash by other means – http://bit.ly/Lsx7Z
By selling domain “vanity” usernames, it would cut down on fakes, fans, and would also help promote businesses to use Twitter to interface with customers.
Very clever
Twitter certainly needs a way to monetize but it would be great if they could do it without traditional ads or selling user info. They are very fortunate to not have to worry about this now – they can focus on continuing to build their base. A strong approach to making a profit would be continued integration of Twitter into other online tools in particular open source content management systems and enhancing the ability for personal customization.
The monetization approach depends upon the way more people will use it(twitter)
here’s my take 5 Most Popular Uses of Twitter. And How Can These Affect its Monetization Strategy.
is it just me, or is brands using twitter commerically not just another form of advertising?
There are so many companies on the internet that seem to think of advertising as the only possible revenue model, i wonder how many are on borrowed time.
Wow, that’s short sided thinking by @biz and the team.
Right now they should be focusing laserlike on how to break even. Putting some text ads in the sidebar or in the stream will help them to reach that goal, and importantly help them remain an independent company.
We all see where tons of funding have taken lots of companies, right down into the deadpool.
they should sell some ads… but not sell ads for crappy companies. ads for well respected and good companies can add value in my (potentially biased) opinion…
Too bad, they need a revenue stream that scales with usage and expenses. Their valuation right now is based on monetizing their entire growing user base, not just a small subset of it.
None of the other ideas I’ve seen bandied about do that. What percentage of people on twitter have ever searched? What percentage of people on twitter have ever even retweeted?
maybe its time for a twitter category system to potentiallly harness social add dollar. a little vertical locator clustering could go a long way.
plumbing.twitter.com
dentist.twitter.com
hairsalon.twitter.com
VerticalLocator.com – straight up
Similar to AllTop, interesting theory..
hey locator douche, they could have a category for you too!
losers.twitter.com
I’m sorry but I just don’t buy that in-stream ads or banner ads, or any traditional ads for that matter on Twitter make sense.
Specifically, Twitter derives much of–if not all of–its value from its user community. In turn, its user community grows in an environment in which ads and other distortion is non-existent. Consequently, altering the stream/splash/overall Twitter environment by including ads would have a radical impact on its user base; thereby negatively affecting the value of Twitter.
Twitter is not a service that people NEED. It is a plaything, albeit one that millions of people love, but if the landscape is altered enough to modify the experience then that isn’t good for Twitter.
Point being, if they had wanted to monetize through stream/banner/display ads they should’ve done it from the beginning and allowed their community to grow organically. Too bad they didn’t.
heh. facebook, myspace, etc are all “playthings”. users aren’t going to abandon something they use everyday just because the company is trying to pay for the resources they are consuming.
they should have done it from the beginning? i suppose google should have done that too… oh, wait, they didn’t do that and figured out how to monetize later… ANY website who plans to monetize traffic through advertising should wait and do it later. it make sense – build up a loyal user base, provide them with something they can’t live without, and then integrate some advertising to monetize the traffic. It’s those sites that monetize form the beginning and are worried about monetixzing vs. making something useful that often run into issues… priority conflicts, etc. imho
Twitter Rival coming out soon. Twitter should sell while it still has some hype.
Not sure about a rival, but I would agree….now is the time to sell. ( i.e. – Digg )
twitter will go the way of the do-do. once spam becomes rampant (it’s starting), people will stop using it.
oddly, i haven’t seen much spam on FB. probably because searching for random people is difficult.
i bet that they will cave in and post ads. they’re so easy to impliment, and they bring in a lot of money. i don’t figure they’ll ever be as bad as myspace, but a little wouldn’t hurt. i think it’s easy to ignore them.
If Twitter was smart, it would include ads as part of a value added service. For instance, if someone were to Tweet: ##pizza and it returned top local sponsored results as a tweet, it could add value to the user and increase sales to local business who advertise on Twitter. Twitter is really a great tool for mobile and should use it to it’s advantage.
Fundamental differences on user behavior between Google and Twitter drove twitter toward this decision. See my blog post regarding this analysis yesterday. http://2above.c...th-ads-for-now/
twitter sucks
funny, looks like twitter itself is the only one not making money on twitter!
amen!
The web will one day be well understood. Twitter is a great example of owning a HUGE building, that cost’s millions of dollars. And you let everyone hang out in it. Just a huge high school cafeteria. Except most school cafe’s actually sell something. How long can you sustain a GIANT building with huge overhead costs before the fun runs out? It’s just not a viable business.
Patience is a virtue…….maybe even when it comes to making money?
eh this is their peak they might as well make money
I for one think Twitter should stay away from advertising. Twitter is more about contacts and personal lives. Emotive advertising is not for everyone!
Keep up the good work!
James