Twitter must learn from the best if it's to monetise users
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Ciarán Norris, head of social marketing, Mindshare Worldwide
While 2009 has seen an explosion in Twitter’s user numbers, it hasn’t had anything to show for that growth but acres of press coverage. However, this might be about to change after it announced last month changes to its terms of service to allow it to show advertising, an about-turn from previous pronouncements.
This doesn’t mean it will definitely start to show ads, but it does suggest Twitter has decided it needs to do something to start building revenue, especially if it wants to live up to its recent $1bn valuation.
The fact Twitter may run ads shouldn’t come as a surprise, especially as it has shown ads on its Japanese site since that launched in April 2008, and has been testing ad placements on its main site since March. While the Japanese ads are similar to standard display formats, history suggests Twitter will need to try something different if it’s to gain significant revenues.
Some critics have suggested the reason other large social properties have failed to build revenue streams in line with their audience size is that users don’t want to be sold to when in these environments. If you look for the standout success in terms of monetising traffic, the only name that comes to mind is Google. By allowing brands to place ads in front of people who are actively searching for the services the brands offer, it has dominated the digital marketplace. If Twitter wants to make a success of advertising, it may need to take a similar path.
Twitter will almost certainly take heart from the fact it’s increasingly being used by people looking for up-to-the-minute information, with traffic to its search function increasing, although not at the same rate as its overall use. The incorporation of trending topics into the standard view on Twitter profiles has undoubtedly been responsible for much of this growth, along with the role the site has played in events ranging from demonstrations in Tehran to earthquakes in the developing world.
If Twitter is to monetise its growth as a search tool, though, it’ll need to get smarter. At present its search simply ranks results by time (most recent first). If it can rank by relevance, possibly by analysing users’ social graphs and which items their peers have found interesting, it could create a truly innovative way of presenting results.
So if Twitter wants to make serious money from advertising, it’ll need to learn from Google’s ability to usefully filter and rank content and monetise those results. That’s assuming Google doesn’t just buy Twitter or launch its own service doing exactly the same thing, in which case Twitter’s $1bn valuation might become another footnote in the history of websites that couldn’t quite work out how to turn users into revenue.