Wednesday, March 03, 2010

How To Turn Twitter Profitable ?

The latest news from Twitter is that they are working on a business model to actually earn some money pretty soon. I believe the crisis and the questions about its economic potential have driven its CEOs to speed their revenues search.
Twitter has announced they are working on a way to advertising on Twitter search pages.

A story at the Wall Street Journal's AllThingsD says that "Ads will be tied to Twitter searches, in the same way that Google's original ads were. So a search for, say, "laptop," may generate an ad for Dell. The ads will only show up in search results, which means users who don't search for something won't see them in their regular Twitterstreams.
"The ads will use the Twitter format – 140 or fewer characters – and will be distributed via the third-party software and services that use Twitter's API. The services will have the option of displaying the ads, and Twitter will share revenue with those that do.
"Twitter will work with ad agencies and buyers to seed the program, but plans on moving to a self-serve model like Google's, down the road."
That will be a dramatic change from the present advertising model, where small text adverts appear on the top right of Twitter users' home page. It is not known how much those garner in revenue - but given the low public profile of many of the advertisers there, it's unlikely to be as much as the search deals that Twitter signed on the same day last October with Google and Microsoft's Bing.
It is not clear how soon the new service would launch, though AllThingsD suggests it could happen "in the first half of the year".

Now, what the article shows out, is that Twitter’s audience is still to low to actually secure profitability. But this is a godd step toward a healthy business model. I have always questioned most of web 2.0 business plans for two reasons:
They’ve loved to show off they are not working at all on a business model. They have settled their future on the number of people which would use their service.
They’ve considered brands and advertisers as milk cows. But the advertising market is hurt deeply by the crisis, as marketing budget is most of the time the first one to be cut. Also, they might focus on main web 2.0 platforms like Facebook and Youtube, but they won’t multiply their investments on the web.

But actually, the fact Twitter is working on those projects is a good sign for the company: they start to shape the way the service will look like in the future, in a shape that will be healthy and strong.