ESPN Bottomline 2.0

Wednesday, July 7, 2010

Twitter -- @EarlyBird and the endless possibilities

I have been wondering how Twitter was going to make money.

I love the idea of Twitter, if not alway in practice. I tweet, a lot, and try to be more than an automaton linking my articles and breaking the occasional bit of news. As someone from the company said recently, Twitter is a "information media" platform as opposed to a "social media" platform and in that regard I believe it to be true.

Twitter has come to replace a lot of folks RSS readers and it is great if you are in the news junkie business and have an affinity to scroll. This is what makes Twitter important to me and as such I have been hoping that they would eventually acquire a business model to stay at the top of the microblogging hierarchy. Hey, I have brand loyalty sometimes too!

Yet, I have not been sure how they were going to do this. My first thoughts that Twitter, in and of itself, does not have a lot of business potential. Advertising is tricky because a vast portion of the network operate from third party clients (I am a TweetDeck and UberTwitter for my Mac and Blackberry, respectively), hence "Promoted Tweets" on trending topics does not seem like it could have scale. Placing ads within peoples timelines could work to penetrate that third party system (or, as Twitter has been doing, consolidate the third party functions to vertical integration) but that may cause a user backlash that their trusted company and platform was, more or less, spamming them.

The thing that I saw that Twitter really has as blue chip asset is the most important thing when it comes to the interwebs -- data. The Twitter data "Fire Hose" is impressive and growing. That is why it did not surprise me that the first revenue model that Twitter employed was to sell access to the data stream to Bing and Google along with other various businesses. The business-to-business model allows Twitter a marginal economic core to sustain it while figuring out other business models that will allow it to grow in to a tech powerhouse, climbing the ranks from "successful startup" up the latter to Facebook or even Google status (though I do not envision Twitter to ever be as big as Google).

Yesterday, Twitter unveiled the @EarlyBird program. Essentially, @EarlyBird is a akin to Groupon or Woot -- partnered deals with companies to distribute advertiser deals.

From Tech Crunch:

Looks like Twitter is about to start offering users exclusive, time-bound deals, events and sneak peeks, for which it has partnered with a number of (yet unnamed) advertising partners.
Those advertisers will distribute offers via the @EarlyBird account, and they get to determine the terms of the offer, including availability, amount, and pricing. And you? You get to opt in to them.
If you want to get access to said exclusive deals, you need to of course follow the @EarlyBird account, although you may also see offers if someone you follow retweets a tweet from that account. Yes, that means exclusive deals are bound to get viral pretty quickly, which will be interesting to observe given that many of the offers distributed via the account will be time-sensitive of nature (otherwise it wouldn’t be called Early Bird, of course).
I was reading this last night and, all of a sudden, everything became clear . . .

Twitter can do everything.

Name me a business model on the web. Search? Twitter has its own impressive search already and it is not a stretch to jump from Promoted Tweets on trending topics to promoted tweets on search terms integrated into the feed or on the page. Groupon, deals and partnerships? @EarlyBird has the early lead on that. Location aware partnerships, a la FourSquare, with local businesses and other media properties? Does not seem that far away as Twitter already does location. It could augment part of the service in the mobile sector to have the option to always know where a tweeter is and send promoted tweets from nearby businesses. Auctions, eBay style? Tweets seem a ready made way to operate an online auction with the proper supervision.

Twitter probably cannot (and should not) jump into straight ecommerce. Amazon and company have that taken care of. But, partnering through @EarlyBird gives them a portion of that revenue stream.

Twitter's rise and relative ubiquity compared with FourSquare and Groupon make it the perfect platform to steal the thunder from those business models as they attempt to grow. 

The only problem is that Twitter is going to need to grow up and in a hurry. The scalability issues they have been dealing with (and painfully highlighted by the World Cup) cannot exist if Twitter is going to make lasting partnerships on the advertorial and marketing level. Businesses are going to want the money they spend on these various models to payoff at times of highest traffic. The problem with Twitter right now is that times of highest traffic cause the system to fail. If they can work that out in the near future, Twitter can take off as the model Web 2.0 company heading into the next decade.

A year ago I was baffled as to how Twitter could possibly sustain itself. Now, the possibilities seem endless.

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