Twitter’s latest round of fundraising values the company at $3.7bn. Not surprising then that their attempts to monetise their massive user base are ongoing with yesterday’s launch of Twitter for Business. How they have gone about it is actually pretty interesting.

Instead of simply selling display advertising to appear to targeted demographics (albeit Twitter doesn’t enjoy the same demographic visibility as Facebook for example), they have opted for a somewhat more creative approach.

Advertisers can tap into the user base in one of three ways. Promoted tweets, trends or accounts. We have seen promoted tweets before whereby a promoted tweet is placed at the top of your tweet feed. A promoted trend is where you can pay to have your promotional tweet at the top of a particular trend. Finally a promoted account is whereby your account is promoted to those who are likely to be interested in it. For example, Google’s Nexus account was promoted to me most likely as I follow Matt Cutt’s and various other Google related Tweets and so it is deemed relevant to me. Of course, I have followed it and I guess anyone interested in Google would also so it does seem like a pretty cool way of adding followers.

In terms of how this advertising is charged, I have, as yet, investigated in detail but interestingly the model is similar to Google’s ppc whereby advertisers are only charged if someone engages with their advert. Engagement is anything from following the account to re-tweeting the Tweet.

On another note, the collective buying website groupon.com is currently valued at around $6bn, nearly twice Twitter’s value. For a website less than two years old, it really is hard to comprehend!

I have always been skeptical about Twitter. I don’t deny that it is a useful and enjoyable site and I am a regular user; my skepticism is based on the fact that I don’t think that it is so groundbreakingly revolutionary to merit the attention that it gets.

People often point to its 50million user-base to validate that “everyone’s on Twitter” but studies show that about 20% are active and over 70% of new users abandon their accounts after a month. It appears people feel compelled to join based on the hype and when they see what Twitter actually is all about they are a bit disappointed and leave.

An undoubted trend that has emerged too is that those who do use Twitter tend to use it an almost voyeuristic way to spy on celebrities – nothing wrong with that but it means Twitter is becoming less about social interaction and more like a news-feed. It appears Facebook is for socializing and Twitter is for keeping an eye on your favourite celebrities or companies. This is the opportunity for companies as they can use it to reach their followers.

As Twitter was always put forward as a social site but has very much moved away from that, its investors surely must be at least slightly uneasy that the site is still pretty much “pre-revenue” after raising over $120m in funding. “Pre-revenue” is a dangerous term that often is a euphemism for “we have no bloody clue how to monetize this!!”

Google and Facebook have proved that where there are eyeballs, cash tends to follow in the form of selling advertising to those who want to put their ad’s in front of these eyeballs. However Google’s USP of putting your ad’ in front of potential clients at the precise moment they are researching your product/service and Facebook’s remarkable demographic targeting for display advertising due to the fact that people tend to populate their profiles in much detail are clear selling points. Twitter has dipped its toe in the water in an attempt to move, eh, post-revenue with their sponsored tweet concept. One thing is sure and it’s that this won’t be the silver bullet to monetize Twitter as its appeal is limited if there is any at all from an advertising point of view.

I’m not saying Twitter is useless but to have taken on-board such a large amount of money, have disturbingly high churn rates and no clear plan in sight to monetize the traffic they do have, there is every possibility in my mind that those who have put their money in will not see it back.

http://money.cnn.com/2010/03/10/technology/twitter_users_active/

Today saw the announcement of what is a key development in the history of Twitter. The four year old company has taken the world by storm with millions logging in daily to check latest tweets. However, the commercial basis for the company has been somewhat shaky with it forgetting the two golden rules of business for the last four years. Rule #1: never lose money. Rule #2: Never forget Rule#1. The company has been kept a float by tens of millions of dollars in venture capital to date.

Twitter seems to be finally looking to monetise the millions of eyeballs that it attracts daily by selling “promoted tweets” to businesses looking to get their message to Twitter’s user-base. Obviously, making any judgement at this point on the effectiveness of promoted tweets as an advertising medium would be premature. Those at Twitter and its backers will likely have some sleepless nights ahead as they wonder whether or not their user-base can generate real cash. When I learned what Twitter actually was, I was amazed that such a basic site had generated such a stir. I predicted its eventual demise and that it was no more than a passing fad. I am sticking to my guns on this but be assured our social media team will be studying developments closely to see if there are opportunities for our clients to leverage Twitter as an effective advertising tool. Personally, I doubt it.

SEO India