Wednesday, January 14, 2009

How to Monetize Twitter

Rumor has it that 2009 is the year Twitter finally will monetize its website. This chatter has been growing the last few months from Internet Industry experts and media pundits. The latest rumor has it by end of Q1 2009, Twitter will debut its monetization plan.

For newbie’s, here is a quick review of Twitter. According to Wikipedia, Twitter is a "free social networking and micro-blogging service that allows its users to send and read other users’ updates (otherwise known as tweets), which are text-based posts of up to 140 characters in length". But this doesn’t tell half the story. Twitter is much more than a micro blogging platform. Twitter has morphed into a new media channel where you can gossip, opinionated interaction, news reporting, info (web) commercials, links to news and articles. With old Media dying a slow death (today only four in 10 households subscribe to a daily newspaper compared to a more than 100% household penetration in 1950), Twitter has emerged as a new powerful media channel. Twitter is also useful for small to large corporations i.e., from media relations to product technical support.

New uses of Twitter arise every day.

How would you monetize Twitter? Easier said than done. Being a big fan of Twitter, I'm getting a bit restless waiting for them to announce or roll out an idea or platform they can generate revenue from. My guess is that the plan will be this year and management (and their VCs) are not ready to show their hand yet. So with that, I’d like to give my 2 cents and show them the money!

First, you want to monetize the Twitter network while at the same time increase its user base. My overall idea centers on giving each new and existing user a small amount (%) of ad revenue. What! Am I crazy?! Nope. Let me explain. The new ad section would focus on user’s profiles (tweets). Only ads that are “click thru” on the individual user profile will get a % payout. Rectangle box at the end of Twit section will serve as ad section.

Ad section:
- Simple box
- Contextual advertising in tweet box. Figure users psychographic profile. Useful in Market segmentation in serving up individual ads.
- Use entire Twit section background as some sort of a movable ad or movie preview clip with twit text clearly outlined as to make it the focus first, background ad second. No Ads in every single consecutive tweet. Make them appear in every other Tweet or every "third" tweet. Look at psychographic and behavioral variables so as to not lose the focus of Twitter.

*For hard-core twitter users (traditionalists), create a box upper right corner "Ads OFF/ON" switch. Twitters annoyed with ads, click =ADS OFF. Twitters who want to participate in ads = ADS ON. The Ad revenue system inside Twitter is the killer app. New Twitter register users can opt into participating in ads or not. Existing Twitters will receive a note, email, or Twit to ask them if they want to participate. They can turn on or turn off the ads. Hard core Twitter enthusiasts could choose to not run ads.

Why would a Twitter user want to choose to run ads? Twitter users allowing ads to roll on their profile would get (for example) anywhere from 1 cent to 10 cents for every unique click thru. Revenue sharing (Twit ad sharing). This would depend on how popular your profile is at the time (just like buying keywords). Revenue would be payable through PayPal or check when revenue hits say $25.00. Paid out monthly. This is just the basic idea.

Results: More users will sign up for Twitter and this free ad money giveaway will go viral. Everyone will want to sign up. Profile/User base will approach MySpace and Facebook user numbers.

Benefits to Twitter:
1. Increased user base
2. Real Revenue
3. Ad options will satisfy the Twitter hard core base (no backlash)

Infrastructure strategy and costs? Depends. Twitter can build their own ad server infrastructure or get a third party ad server company to help integrate (much cheaper). One thing’s for sure, the ruby on rails platform will have to go. Make this new ad-centric platform more robust = no more predictable downtime. The Google Adsense and Adwords platform would be easy to implement inside Twitter. Of course, once this has been implemented, Google (maybe even Yahoo now that it’s under a new CEO) will have to pay a higher price to acquire Twitter.

Random thoughts: Since this is a “web 2.0” company, why not…
1. Ask their users to provide feedback on monetizing ideas (harness the collaborative feedback loop).
2. Roll out a preview or beta and ask the Twitter community to test (bugs). Again, harness the collaborative feedback loop.
3. Give the Twitter user control over the ad content on their profile tweets.

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