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.

Startups - show a path to revenue or LOVE?

I wanted to share a few thoughts on whether startups should show revenue first or love? i.e. once the product is ready should it generate immediate revenue or display customer desirability and love. Of course, having both is ideal but tough.

I've seen and researched startups in many areas till date - social, mobile, etc. My thoughts are relegated to companies with some sort of consumer element to them (where the eventual customer is the end-user). My theory is that displaying immense customer desirability is a must-have and absolutely essential even if that comes in deference to immediate revenue generation. I can point out to many startups that became great companies (YouTube, Facebook) and new and upcoming ones which are generating interest. I'll not name them but you've ones that are reinventing Q&A using a social angle or displaying location based check-in and services using innovative display on your mobile phone. These are not new ideas but regurgitating old ones. YouTube was not the first video site nor was Facebook the first to market in social media. So, why have these worked and not others. Is it luck or something else?

It's their understanding of the end-user and making their product immensely desirable and loved. The world is all about how things are perceived, viewed, and consumed. Once you've these elements taken care of, audience follows. So, who is your user, there are generally multiple ones

1. The eventual user or end-user or consumer. This is the audience that you've to please.
2. Economic buyer, e.g. advertiser. She/he is the one who will pay your bills.

Ideally you've got to get love from both but given a choice follow this priority order.

So, what is the takeaway, in your startup team, make your product be loved. Love = more customer traction = eventual revenue. And how you can do that, apart from deeply understanding the customer and having a great product? Get the services of a great designer - a very important trait in addition to the engineering team.

Mobile & Social and Advertising

Are mobile and social related in a consumer mind? I think so; when we talk to advertisers, I hear the following - "how do I make my campaign work in social media". If I dig into this, by social - they mean not only facebook and twitter but mobile devices as well - smartphones, iPAD and its upcoming clones.

And consumers (end-users) think the same. They are not doing technical differentiation as we, Silicon Valley folks do - social media is the site while smartphone is a platform to deliver the message. Nope, the consumers don't differentiate it, for them all of these are channels to get the information about their friends, share messages, get relevant messages delivered to them.

So, ad campaigns for social must be tailored to not only facebook and twitter but all mobile devices as well. I call these new media advertising. This give advertisers the greatest ROI - most bang for the buck.

In effective advertisers are following the audience, as they shift from reading (portals like Yahoo) and searching (Google) to engaging. The latter being serviced by facebook, twitter, smartphones, and mobile devices.

Welcome to the new world.

What is an effective ad campaign in Social Media?

Advertisers have been asking this question for the past few years. What is an effective ad campaign in Social Media. What they have found is CTR for display ads in any social site is lower than the already poor display ad CTR on portals like Yahoo. Well then what works? Is it search ads? But there is hardly any search traffic (how many times do you search in Facebook?). So that is not it.

Before we get into a discourse on what works and what doesn't; let's understand the end-user behavior in these sites. What is the user trying to do in any social site - they are interacting - engaging with their friends in discussions, commenting, sharing, etc. In reality social interaction is similar to what we humans have been doing since time immemorial - we interact and engage. And therein lies the answer. The effective formats in social media are the ones that engage and interact the user in some action.

Just look at display ad sold by Facebook to large brands - these incorporate polls within a display ad which can be shared with your friends (Facebook requires an annual brand commitment of $20,000 prior to using these ads). Similarly fan pages which attract an audience must have engaging applications built into it. These don't have to complex, but you need elements of polls, comments, contest, etc. Without these simply broadcasting a brand's message is not going to be effective in Social Media.

Storefront in Social Media

There are lot of companies putting out storefront on FB nowadays. That's a great idea but what about the investment that brands have done over these years in creating online storefronts. What we need is a way to tie the two experiences together - product catalog and storefronts.

Check out the new social app template from Oolium called social catalog, it does just that and more.

Or better still check it out on facebook.

Facebook Likes - a lot of "interest" data being collected

Facebook likes are becoming commonplace - not only in facebook pages but off-network (outside of facebook.com) as well. Blogs use it, brands are incorporating it. Just check out the use of facebook "likes" in websites.

So, the question arises - how can we use this data more efficiently? I've always believed that, apart from being the place that folks are spending most time on the internet, facebook is a very rich data store. Facebook knows what its audience is doing both on and off-network. And that's a rich source of data. Think of its benefits:

1. Tracking trends. Urban outfitter knows not only the number of customers who "like" their product but their specifics as well (demo and profile)
2. I should rephrase, its not Urban outfitters but Facebook. They can sell this data back to the client!
3. Word of mouth marketing. There is no better way to sell than word of mouth from your own friend. 80%+ sales are from word of mouth marketing. Sharing feature of like is best suited for it.
4. Virality. Sharing with friends.

Social Media Ad Growth

We all know that Social Media marketing is the new buzzword in town. And for the right set of reasons. Just look at the eMarketer report on social media ad growth projections

I've been following analyst report in various industries for a very long time. And in most cases they overestimate. But what I found surprising this time round was - these forecasts were revised two times in the upward direction! Wow! The ad growth here is phenomenal. And rightly so, where the audience goes, so do the advertisers.

And they are coming into this field in a hurry.