Just like most social media sites Twitter has been dogged with questions about how they are actually planning on earning money. For a while many observers, haters, and users were convinced there was no way for Twitter to earn a profit. Traditional display ads were not going to cut it and most observers didn’t really believe that a paid account model would work. Twitter seemed to be in no hurry to begin monetizing outside of whatever deals they arranged with Google and Bing to provide access to Twitter data. Twitter was smart and observed how people and businesses were using their feeds and began developing a strategy around that. The first announcement related to monetization was Promoted Tweets coupled with their quality measurement, Resonance Score. They then began testing Promoted Trends, which according to Twitter
Promoted Trends are a new advertising concept we began testing this week; they are an extension of our Promoted Tweets platform. With Promoted Trends, users will see time-, context- and event-sensitive trends promoted by our advertising partners. These Promoted Trends initially appear at the bottom of the Trending Topics list on Twitter and are clearly marked “Promoted.” As conversations about the topic increase, Promoted Trends may move up the list.
The latest monetization announcement from Twitter is Early Bird. All of their monetization efforts are taking concepts and ideas that others have rolled out and establishing an official Twitter offering. Many may consider this to be somewhat shady but it’s their data and their right to utilize it any way they want. In the end I think Twitter is incredibly smart in the approach they have taken in the monetization strategy.
The User Friendly Monetization Strategy
So what is so smart about how Twitter is evolving the way they make money? Simply put they are closely watching how their user base is utilizing their service and how businesses are exploiting it to earn money. Most Twitter geeks are aware that companies like Woot have been leveraging Twitter to earn a significant income stream via time sensitive deals. These deals lasted for a short period of time, either until the supplies were exhausted or for a set period of time. Many of the products were selling well below the regular price so interest was extremely high. Users flocked to these deals. Obviously Twitter saw these feeds driving interest and revenue to their business and realized they could exploit this.
Enter Early Bird, which is modeled after those special limited time deal feeds. Basically users follow the Twitter Early Bird feed and get special offers in their Twitter stream. Twitter makes money because advertisers pay to have their offers added to the Early Bird feed. Users have responded and after only a few days Early Bird already has over 35,000 followers. Obviously users like the idea and are happy to receive these ads. Once again, Twitter implemented an already popular concept and leveraged it to expand their income potential. It will succeed if advertisers are able to earn a good ROI through the program. I have to believe that savvy advertisers will successfully exploit it and Early Bird will be a nice stream of income for Twitter. Now the question of what happens to similar services in Twitter remains unanswered but that’s something to explore another day.
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