Wednesday, April 14, 2010

Twitter Tries to Make Money (Finally)...

For a company said to be valued at around a billion dollars, Twitter still earns almost no money. Well, that's about to change. Maybe. The company announced yesterday that it would start launching "Promoted Tweets", or short advertisements, as a new method of bringing in revenue.

Some Twitter users are calling this a "sell-out" move. But really, Twitter is a business, and for one of the most heavily trafficked sites on the Web, how could they not reasonably try to capitalize on that success?

Moving towards a Google-style advertisement-supported business model, their plan is to, first, include Promoted Tweets at the top of search results, and, second, to then display them in users' personal streams. As Wired comments, this plan is also intended to have a few cascading effects...

While is a popular destination, millions of people use desktop and smartphone apps for the service and rarely use the site at all. Some of those apps themselves have ads which Twitter gets no cut from — including Tweetie for the Mac and iPhone, made by a atebits, a company Twitter bought last week. Because Promoted Tweets will appear in search results on Twitter apps too, the company will get a piece of the action on those platforms as well.

However, TechCrunch is a little sceptical as to how well the advertising model will ultimately work...

Quite frankly, counting impressions, clicks or retweets isn’t all that interesting. And there is nothing to indicate so far that clickthrough rates or other conventional advertising metrics will perform any better on a promoted Tweet than in a search ad. My guess is it will probably perform worse because there are just so many more commercially-oriented searches on Google than there will ever be on Twitter.

There is, of course, the inevitable user backlash to consider as well. 71% of users are apparently perceiving this development in a negative light. But that's a predictable initial reaction that I would expect to fade away over time - it's similar to how Facebook users held a boycott to protest the new "live feeds" feature in 2006, yet didn't slow the growth of their userbase at all. (Boy, does that seem like a relic now).

I say let Twitter try to make money from advertising. Why not? As long as it remains relatively unobtrusive users will grow to accept it, just as they did on Google, on other sites, and in other mediums.

My bigger complaint is with the changing culture on Twitter recently. Whereas it used to be a fantastic place to have conversations and interact with like-minded people, it's really transformed into a one-way broadcasting platform, mainly for already-established peronalities and news outlets. It used to be that if you followed someone they'd follow you back, almost every time. Now there are way too many accounts where people have thousands of followers but they're only following about a dozen people themselves. Or have staff writers controlling their twitstream for them.

It may be something of a rant, but forget advertising. If Twitter doesn't put the "social" back into the social-networking aspect of the site, that's the real threat to the continued growth of its userbase.


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