Twitter's Business Model - My Take

For a while I was hearing people say: “Twitter has no business model!”, or “Twitter cannot monetize their service!” but it seems that something changed lately. All started with the rumors that Google will buy Twitter few months ago; then talks that Microsoft tries to estimate the value of Twitter; and now – Twitter is trying to get into the search business.

Surprise! Twitter tries to make money by himself. Jackie Huba posted Twitter & advertizing, part 2 almost two months ago and her post is inline with what I was thinking about Twitter and how they can make their service profitable. The part that I don’t like too much is that every online business (including myself with this blog:)) tries to make money from advertisement. There is nothing tangible behind the advertisement! There is no value for the user, or customer who sees the ad! Unless… the ad is relevant to what the user is doing at the moment.

In all the cases Twitter can monetize their service. Even with the old technique called “buy me because I am cool”. We’ve seen big companies doing that a lot while the economy was booming. Soon this time will come back and Twitter will be in good position.

Until then I bet that Twitter is going to follow the ads model with their recent investment in search but here are my advises for them.

• If Twitter goes with the ad model then I would like to have the ads non-intrusive and relevant to what I tweet about. Also, their ads should follow the tweets model – no more than 140 chars (or even less), and no more than 1 ad per tweet. If this will be the way to keep the service free I think lot of people will be fine with it.
  
• This one though I like more: Twitter has the power of information – news, trends, opinions… everything you can imagine is discussed there. This is what Jackie means in her post above. But there is more to it!
  
  What about surveys? Right now the influencers run free surveys among their followers. Twitter’s own account has more than 1 million followers – this is much bigger representative sample than most of the surveys done by the research companies.
  
  Trends is another one. Products and companies are always discussed offline and online, and Twitter is one place where this happens a lot. If companies plan to run for example marketing campaign they can partner with Twitter and monitor the reaction from the beginning till the end – what people’s perception is? Do they accept it? Do they reject it? Etc.
  
  News. Great example is Mike Wilson who tweeted during Continental Airlines crash in Denver (for some reason US news sites are not among the tope ten results for this search:)). Twitter can be the new CNN – they can create news channel (and of course serve adds there:)) and serve the news before everybody else. Also, keep in mind that more and more news are created and recorded by normal people and not journalists (9/11 video recording, Concorde crash etc.)
  
  Product reviews. If Twitter is able to get a sense for the sentiment for particular product they can provide this information back to companies or create review channels people can subscribe to.

I can go on and on with even more ideas but you get my point. Information is powerful – you just need to find good way to deal with it. Google became successful because they found a way to index the information on the Web. Right now Twitter is big bucket where everybody throws information and the first one who finds a way to organize it will become profitable.

But Twitter needs to be also careful. Twitter is great platform that allows third parties to build on top of it. Whatever monetization model they build they need to make sure it propagates to those third party applications – else, what’s the point? How many of you go and update your status from Web? And how many from TweetDeck?

P.S. And if Twitter takes one of my ideas above I hope they will remember where they read about it :)