Twitter, which reportedly received $100 million in venture financing, could turn on the revenue tap by offering value programs aimed at media buyers. Here's how.
The big news: Twitter is raising another $100 million on a valuation of $1 billion! Well I guess that seals it. Twitter is in it for the long haul, declaring its intention to remain a freestanding media company.
But as Bloomberg News reported, "Twitter has yet to report any significant revenue." So how can it justify that kind of valuation? Let's put it this way -- remember when Google had yet to report any significant revenue?
Twitter attracted 25 million users in August, compared with 2.2 million a year earlier, according to Nielsen. With that kind of groundswell and large database of registered users, the opportunities for highly targeted contextual, demographic, geographic, and behavioral advertising is huge. Twitter could monetize in ways that would be non-intrusive.
Twitter has reached a point where there aren't many alternatives to the micro-blogging platform. While it's not impossible for one to emerge, it's unlikely. People are pretty much wedded to Twitter, plus there are so many complementary applications in use on desktops and mobile devices around the globe. It would be difficult to topple Twitter off the top of the heap anytime soon.
Then there are fears about injecting advertising into a media environment that people enjoy. I always hear, "Well, people don't like advertising," or "We did a poll and people said they did not want to see ads." If you asked television viewers if they wanted to see ads during their favorite show, close to 100 percent would probably say "no." Now conversely if you asked people if they preferred to have their favorite show with ads or not having their show at all because there was no funding, close to 100 percent would probably take the show with the ads.
The same goes for Twitter. Of course, no one wants it cluttered with ads. But if there were only two choices -- Twitter with a way to stay in business or no Twitter -- the vast majority of us would choose Twitter with a way for it to stay in business.
The same thing happened with Google, YouTube, and Facebook. Even YouTube has pre-rolls running on certain premium partner channels and I haven't heard of any huge consumer backlash.
So, I started to think of the different ways I'd monetize Twitter if it were my site. And that includes programs that I'd find valuable as a media buyer.
Here's my list. Please feel free to add to it:
Every leading Internet phenomenon entity, whether it was Google, YouTube, or Facebook, had to get over their fear of user pushback. They all had to do things that would drive revenue and take care of their overhead. Typically, the results have been very positive for their users.
Google could afford to offer free services, applications, software, and more. Could Google have done this without revenue? Same with Facebook. Could it afford the long-term infrastructure to support all those free applications and interactions between people without revenue?
Just think of all the cool things Twitter might do. At the very least, it will be able to afford an infrastructure that doesn't crash or block users when they get too busy.
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As founder and CEO of Overdrive, Harry Gold is the architect and conductor behind the company's ROI-driven programs. His primary mission is to create innovative marketing programs based on real-world success and to ensure the marketing and technology practices that drive those successes are continually institutionalized into the culture and methods of the agency. What excites him is the knowledge that Overdrive's collaborative environment has created a company of online media, SEM, and online behavioral experts who drive success for the clients and companies they serve. Overdrive serves a diverse base of B2B and B2C clients that demand a high level of accountability and ROI from their online programs and campaigns.
Harry started his career in 1995 when he founded online marketing firm Interactive Promotions, serving such clients as Microsoft, "The Financial Times," the Hard Rock Cafe, and the City of Boston. Since then, he has been at the forefront of online branding and channel creation, developing successful Web and search engine-based marketing programs for various agencies and Fortune 500 companies.
Harry is a frequent lecturer on SEM and online media for The New England Direct Marketing Association; Ad Club; the University of Massachusetts, Boston; Harvard University; and Boston University.
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