Most of us are probably focused on using micro blogging site Twitter to make money for ourselves. But is Twitter making money for itself? Twitter has become a veritable cultural phenomenon and one of the most talked about social internet companies. As Tod Maffin points out in his Techvibes blog “This Is How Twitter Will Die. (And, thus, live forever.), Twitter has in an essence become so much bigger than itself that it could be drowning in its own ubiquity. Twitter execs are fast trying to catch up and make some business sense out of it all before it slips away from their fingers completely. Curious minds have long questioned how Twitter will go about it considering the fact that twitter does not charge you for its service. It is apparently a question that the founders have been asking themselves more of late.
Reuters reports that at a news conference in Tel Aviv this week, Twitter co-founder Stone said Twitter is interested in making acquisitions and promised that twitter will start making money in 2010. “That is something we are definitely interested in,” he said. “We made an acquisition last year that turned out to be an outstandingly good decision.”
The acquisition he is talking about is Summize that Twitter acquired in 2008. Summize is a nifty search engine that monitors the twitter stream for the hottest and latest on a particular subject. This has given rise to an opportunity for contextual advertising next to the pages that show these search results. But Twitter management has been quite vociferous about vehemently rejecting the idea of going prime time with selling ads like Google’s ad sense. Twitter seems queasy about in- your- face kind of advertising and potentially risk losing its organic charm that has made it so popular in the first place. Some have suggested that Twitter would make a better “relationship tool” than a “marketing tool”. Many companies have had successful Twitter promotional programs such as coupon code offers, discounts via twitter etc. Others have used it to aggregate customer feedback. This seems to be more in tune with where Twitter is heading and intending to leverage. According to Stone, Twitter is looking at “nontraditional” advertising and he thinks “everyone’s going to love it. It’s going to be amazing.” It certainly would be interesting to see what exactly they would be charging for this in-direct commercial access.
Apart from considering acquisitions, Twitter has been making several moves of late that signal a maturing of their business model. Twitter received a new round of funding in September from investors such as mutual fund giant T. Rowe Price and private equity firm Insight Venture Partners that have spurred speculations about initial public offering or even sale. It is also partnering itself with some of the best in the business -recently forged deals with Microsoft and Google to allow access for its real-time content and teamed up with social network site LinkedIn earlier in November. Then there also have been several SMS deals such as with Canada’s Bell Mobility. Once Twitter’s free SMS tweeting proved too expensive a service for the company to sustain, it entered into revenue sharing partnerships with strategic mobile operators to make it work. It is still apparently a work in progress around the globe. There are many other complications that Twitter still has to iron out. Harnessing a substantial user base that choose to enter the site through third party services like Twitterific would be one such. What’s ironic is that Twitter has given away way too many things for free such as APIs that third parties use to provide their clients access to Twitter. So will Twitter decide to start charging them now? Or will it get creative and come up with specialized synced up hardware, an apps store perhaps?
There is certainly immense business potential there and a valuable chunk of audience that could be pulled in. It would be a pity if Twitter cannot in some way make business sense of its own enviable success.