In case you haven’t heard about the latest social media craze, microblogging site Twitter.com on the net, on the news and everywhere else, it appears to be THE next big thing in social media. Another site with lots of users but extremely challenged when it come to generating revenue and coming up with a business model.
The folks at www.current.tv have come up with some clever Jib-Jab type videos. One of the latest is about Twitter, Titled Twouble With Twitters and can be seen below:
People use Twitter for a variety of different things. Some use it exactly as depicted in the video while others use it to offer another means of customer service or disseminating coupons. Twitter can and often is a big time sink with sometimes questionable benefits. It serves as a means of self expression for many people and a quick way to communicate for others. Pretty soon it is going to be time to see if it is possible to monetize a conversation. My guess is it is possible but the upside is minimal.
Google has the best source of revenue from online advertising locked up in search. The mindset of a consumer using a search engine is that of someone actively looking for something; trying to satisfy a need. On Facebook, people go there to see what their friends are up to and may opt-in to various applications and offers from various merchants. Typically people dont go to Facebook to shop as they do with Google.
Twitter is sort of a cross between Google and Facebook. Twitter is full of useless information but also has some golden nuggets, however it is still fundamentally a conversation. Can you monetize a conversation or the act of searching conversations? I think the jury is still out but my guess is not very effectively. When you want to search for something to buy, you go to Google or a shopping engine. You may post a question on Twitter looking for reccomendations but that question is most likely to be answered by another Twitter user. It’s an exchange of information that Twitter won’t be able to monetize unless they start inserting some kind of affiliate tracking code in product and site links that people post in their conversations. Should Twitter embark on an AdWords style advertising program, the click-through rates are likely to be in the range of banners ads (basically zero) because a consumer on Twitter is not likely to have the same intent or be in the same mindset they are when searching Google, Yahoo!, MSN or Ask.com.
Twitter can be a cool application for some purposes, however it is fundamentally a social conversation tool whereas Google is an intent and need based “converstional” tool. Twitter will probably burn through a lot more cash over the next few years and months if it stays independent. Since it is unlikely to be able to stand on its own from a financial point of view, it will sadly probably end up as a new Google Beta product. Twitter may prove to be a nice compliment to another real business but I doubt it has any serious revenue potential of its own.