Web 2.0 Featured Article

Has Twitter Found a Business Model?

By Gary Kim, Contributing Editor

Twitter, for better or worse, provides a nearly-endless opportunity for punditry, often centered on its value and business model. Recent deals with Bing and Google (News - Alert), allowing Twitter content to be indexed and searched on both search engines provide at least a partial issue to the “revenue model” discussion. Presumably Twitter gets some revenue from the search ties, though not nearly enough to justify its valuation.

 

How well Twitter can move forward with its stated mission of defining consumer engagement with brands is the issue. By some accounts, as much as 20 percent of the content of Twitter messages now is about brands.

 

At some point, Twitter officials said the company will enable advertising on its microblogging service at some point and could provide analytics to give businesses insight into their businesses as well.

 

Evan Williams, Twitter CEO, also suggests mobility is key to those plans. “I think Twitter can create the most value on mobile phones, because it is more immediate,” Williams said. “We believe we can enhance people’s lives on the move.”

 

Of the various ideas floating around, that seems to me the most logical. Most people don't blog because it represents some amount of work. Blogging takes some amount of thinking. But most people send text messages, because it requires very little work. One text message is exactly 140 characters, the same size as a Tweet. Add location awareness and Twitter could be on to something.

 

Some people will fear that adding Tweets to searchable results will exponentially increase the number or irrelevant or low-value results. That is possible, if algorithms cannot be tweaked well enough. One suspects that is a resolvable problem.

 

The upside for Twitter's potential business model is the ability to use Tweets as a source of real-time information and then brand engagement, marketing, promotion or sales.

 

Lots of skiers along Colorado's front range are finicky, for example. Actual current weather and snow conditions often drive a “go up” or “stay home” decision. And one problem is that ski resorts always seem to report snow conditions that are inaccurate, for obvious commercial reasons. It doesn't help if a resort has to report that snow conditions really are “hard pack” rather than “packed powder.”

 

But “packed powder” is what they report. Tweets can have a powerful influence on discretionary behavior. Length of lift lines, prevailing wind conditions and cloud cover can influence a decision, on the spot, about taking a ski day.

 

New snowfall is another huge motivator. Out-of-state skier visists always spike upwards when national news carries reports of “blizzards” in Denver. But precipitation in the mountains and in Denver often bears no relationship to each other. In fact, snowfall in Denver typically is caused by weather fronts that do not cause snowfall in the high country, and vice versa.

 

Twitter can provide granular information with huge commercial implications, in that regard.

 

On the other hand, on the spot promotions can make a difference, even when some of the other conditions are relatively unfavorable. Once on the mountains, tweets can provide other useful information, such as crowds at one lodge, fewer at another. Around lunchtime, that's a big deal.

 

But it is the potential new criteria for making such decisions that is the new power Twitter represents. Mobile makes sense for on the spot decisions between alternative courses of action.
Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Kelly McGuire