The Twitter Problem: We Love This, But What Are We Going to Do For Money?

[The NYTimes today reveals that Twitter is getting ready to roll out an advertising model and a promotional tweet model to support their revenue stream. This post is a response.]

So Twitter is revealing it’s killer revenue strategy and it looks a lot like an old revenue model they tried with Microsoft called ExecTweets. Oh boy! So here’s the idea. According to the NYTimes article:

The advertising program, which Twitter calls Promoted Tweets, will show up when Twitter users search for keywords that the advertisers have bought to link to their ads. Later, Twitter plans to show promoted posts in the stream of Twitter posts, based on how relevant they might be to a particular user.

Several companies will run ads, including Best Buy, Virgin America, Starbucks and Bravo.

Man, I tell you what, that does not interest me in the least. I suspect it will be as successful as ExecTweets or say Facebook Ads.

So there are several problems that Twitter faces in trying to "monetize" itself. (Sounds pretty funny, to monetize oneself.)

1. Don’t kill the goose as you are trying to figure out how to get the golden eggs.
2. Permission-based marketing is the bomb, but if you haven’t been given that permission, it’s not permission-based. An opt-out means you DON’T have our permission. A default opt-in does NOT give you our permission either.
3. 80% of Twitter’s traffic never hits Twitter.com. Why would we? The Twitter.com site sucks, to be blunt. If you try and use Twitter using only Twitter.com I pity your experience. The river of tweets is like a flood when you get a few active tweeters. (Yes, I’m an ACTIVE tweeter.) I suspect the next point is one of the primary reasons we don’t use Twitter.com.
4. Managing your followers and friends using Twitter.com forces you to use a slow-loading, fail whale-prone, 20-people-per-page, system. Why Twitter Why! I say this to myself, every time I have to use Twitter.com to manage my account. As tools like Tweetdeck and Seesmic and Hootsuite get better and better, the Twitter.com site becomes less and less relevant.

The main objective for Twitter: Make money. Twitter is spending a lot of money *trying* to keep the fail whale at bay. And while investments are essential, the money train won’t last forever. Twitter must stabilize Twitter.com AND figure out how to make money with the beast they have created. All this "Do Only Good" crap is window dressing. They have not figured it out, and with so much money at stake, it’s rather embarrassing for any of the top brass at Twitter to admit it.

It would not bode well for Twitter executives for them to say, "Well folks, we’re still trying to figure it out." (Oh wait, this is exactly what they ARE or HAVE BEEN saying for a few years.) So here’s the best that they have to offer? A remake of ExecuTweets! This time with Starbucks, Best Buy and others. Really Twitter?

Taking off the gloves for just a second, I’m going to give Twitter a piece of my mind. (That they neither asked for or paid for in any way, I might need to add.)

EV and Biz Stone, here’s what you do. Draw the API line in the sand. If you want TWITTER FEEDS OF ANY KIND YOU WILL HAVE TO PAY TWITTER. Simple right?

Of course there will be a revolution. Many will scream and rebell. Perhaps this will be the moment where Google makes it’s STATUSPHERE play. (I don’t know what your sweetheart deal with Google was, but be prepared for them to eat your lunch when THEY are ready.)

But this might be the moment for you Twitter. This might be the very moment to make the BIG PLAY. And here’s more of the strategy.

When the 80% of your API – data feed consumers start seeing these screens (from my Tweetdeck, yesterday):

I tell you what would happen, as if you don’t already know. The proverbial feces would hit the fan. But here’s the cool part. Who is in the position of power at this point? I am talking leverage that goes well beyond telling the world you might develop or buy your own desktop app. (So what. I know you just did that.) Or you might develop or buy your own geo-location app. (So what.) But letting the entire community, and user base know, that you are about to charge for the API streams… Well, I admit that would be ballsy. It might be risking #1, the golden goose thing. But…

Here’s the deal though, to make this really work, you’ve got to fix the fail whale problem once and for all. In the enterprise world, the user base that makes global e-commerce go around, the "Oops There’s a Problem, But We’re Working On It" routine does not play. It does not play at all. You know how every time G-Mail is down for like a second, the entire tech world wrings its hand and curses Google’s grip on our data? Well, that’s what happens every time we try and USE TWITTER for something other than CHAT. When the fail whale arrives on the scene, anyone in *business* says, "Man, these Twitter cats can’t even keep their servers running, I don’t think I’m ready to give them any part of my corporate communication infrastructure."

And see, this is where a company like Yammer is making HUGE inroads. The fail whale does not exist on Yammer. And guess what, their service ROCKS. We used it at Dell. And I’ve used it since at other companies. (I have to say I prefer an integrated internal status tool like SocialText’s Signals, but Yammer will do.) And here’s one more rub. People are paying to use Yammer. Of course they are. If I can run it on my servers, and OWN the data, then we have a deal.

On the other hand, if YOU Twitter sell my data as your own, if YOU Twitter can’t keep the servers up during a conference like SXSW, while you profess to "Do Only Good," it’s not enough.

So here’s my plan for YOU Twitter: Squeeze the Twitter API into a money stream. Give everyone a few months to complain, negotiate, and seek other options and then DO IT.

No one is going to care about Promoted Tweets, or ExecTweets. I’m glad (Am I glad?) that you’ve found a few willing partners, paying good money (hopefully), to test flight your new revenue stream. But in the end, dear Twitter, you have only one thing that people want. And if you can’t figure out how to make money on the API… Well, the goose is as good as cooked, IMFHO.

@jmacofearth

permalink: http://bit.ly/pro-tweets

• NYTimes: Twitter Unveils Plans to Draw Money From Ads
• ExecTweets by Twitter and Microsoft and Federated Media.

See also:

• The Twitter Way
• The TwitterTools Matrix

Further reflections on the quotes from the NYTimes story:

The ads will let businesses insert themselves into the stream of real-time conversation on Twitter to ensure their posts do not get buried in the flow. [PULEASE Spare Us. Didn’t the mighty Microsoft plan something like this for Vista and IE, back in the day. THIS is going to piss people off. Seriously!]

“When people are searching on Starbucks, what we really want to show them is that something is happening at Starbucks right now, and Promoted Tweets will give us a chance to do that,” said Chris Bruzzo, vice president of brand, content and online at Starbucks. [Maybe they are looking for a coupon. But I think they would search “coupon” if that were the case. And maybe it will be a good idea to introduce Couponing to Twitter. MAYBE. Sure, Dell has claimed almost unbelievable numbers with their Dell Factory Outlet on Twitter program. But people were ASKING for those coupons. Please refer to the permission-based marketing item above.]

I don’t know, maybe I’m being harsh here, but check out this image below. Is this how YOU see Twitter making the MILLIONS they need to make? Honestly?

And here are a few numbers to chew on for you analytically minded. Click on image to view the full-size grab. Or this link will run the analysis again.

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