Sunday, September 26, 2010

Twitter's new look - finally a path to monetization?

I like the newTwitter interface - its morphing from a timeline stream to a destination. Now, with few Twitter partners (twitpic, etc), you're not taken to a different page but it opens in the right pane of the new interface.

A lot has been said about monetization for Twitter. At a high level, any monetization involves these three steps:
  1. Build subscriber base
  2. Get your audience engaged in your app. i.e. get the engagement time up, and
  3. Monetize.

Facebook is doing a good job at this - it has the highest audience engagement time (time spent on site) for any site. Its this metric that is adding to it valuation and growth potential. You can monetize this audience. Let's dissect it further - where are people spending most of their time in Facebook - its in the games (and some apps), timeline updates (status checking), and media browsing (photos and videos). The beauty of Facebook is that it has created a walled garden - a destination wherein an end-user spends hours on end. Twitter on the other hand didn't force or provide incentive to users to spend time on its site; instead tools syndicated its stream and put their UI on it (e.g. Hootsuite). This, in my mind, is a serious issue - unless users spend time on the site, your potential to monetize is diminished. I'm not sure that features like promoted tweets will generate as much interest in the advertiser community.

Now, let's look at the changes occurring in the land of brand advertising due to social media. For the first time, brands are not in total control of their message. i.e. brand managers cannot do a simple broadcast of their message and influence consumer's opinions. Instead they have to engage and interact with their audience. Its now a 2 way communication channel.

So, what is going to be most effective ad format in this new social world? I don't believe its the good old display ads or search ads. Its branded social applications. Its applications where in user interact and share their opinions to items relevant to them. And the reason is simple - user mindset, the ad format must match the user behavior; search ads in Goog were successful because users were doing targeted search. So, what works here - games, contest, giveaways, social catalog. In each of these apps, the brand has to allow user's to post comments (good or bad) and share with their friends.

We can get these apps up and running in Facebook but we cannot do so today in Twitter. The way we do it is to provide an external link in the tweet. That's a huge issue - the user is now going out of the twitter site. Twitter needs to enable partners to write to the right tab, this tab should be the workspace where links open up displays to show simple applications. Of course, Twitter will have to provide a controlled sandbox otherwise third parties will rum amok. Recently Virgin America ran a campaign - giving discounts to first 500 customers. Just imagine if they could run this promo and provide details in the new Twitter's right pane. That would be rich! and very lucrative for the brand.
This is a huge monetization potential for Twitter.

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