This column was finished before I realized that this week is Twitter’s Chirp developer conference in San Francisco where Twitter will supposedly (and finally) explain how it intends to make money. As you can see below I have my own ideas on this. Let’s compare my ideas with Twitter’s later in the week and see whose are more fun.
I don’t tweet. Yes, I have a Twitter account that’s attached automagically to this blog and whenever I write something new it sends a link to the world. But that’s not tweeting, not really. Still I have several thousand followers on Twitter and pride myself that I don’t inflict myself on them more than 2-3 times per week. I have 750 Facebook friends and there I am somewhat more active though nothing like many of my friends. But even though I am more active by far on Facebook than Twitter, there is no doubt that Twitter is more valuable to me than Facebook. And if I were Google — “Would Google buy it?” being one of the new de facto questions asked about tech startups — I would buy Twitter before Facebook.
Why I would do this is easy. I connect to more people through Twitter than I do through Facebook. The people I connect with through Twitter ask nothing of me other than that I tweet at them. They don’t tweet back, nor do I want them to. If I wanted that I’d try to friend them on Facebook, which is by definition a bidirectional medium. Twitter is a broadcast medium and, as such, has value similar to radio, TV, or publishing.
It is much easier to monetize my Twitter account and — again since it has more people in it — that account has to have greater commercial value.
Think about it. On Facebook I can tell the world that I’ve just written an interesting post and that they should go have a look-see. But, damn it, then I have to see the responses of 50-100 people. They like it, they hate it, they can’t be bothered with it, they find me annoying, etc.. I send out one thing and get 50 things back. Most of the time I don’t want that.
Facebook has a great monetization model — for Facebook, not for me. Twitter, on the other hand, has a perfect monetization model for the Tweeter, though I am not at all sure the company even realizes this.
Twitter works better for me than Facebook in two ways. First, Twitter is the new RSS only better, because Twitter sends not just the text and illustrations, it sends a complete link that brings readers back to see the text and illustrations and the ads that put my kids through private schools.
But that’s nothing compared to the Twitter ad possibilities — ads that you are probably seeing every day and don’t even realize.
Say you are a big celebrity with a million Twitter fans. You could tweet “God I’d love a Mars Bar right now!” and what would that be worth to M&M Mars? At a $1 CPM it would be worth $1000. But I think $1 is too low for Twitter because, after all, your followers follow you. They don’t drive by. They don’t happen to see you. They’ve asked you to enter their homes and spray paint your thoughts on their walls — thoughts that actually matter to the candy lover inside each one. That makes a commercial tweet worth a $10-$30 CPM. Take an average $20 and that’s $20,000 per million followers with Ashton Whathisname making $60,000 per day or $21.9 million per year from his three million followers.
Only one tweet per day has to be commercial to achieve this. In fact I’d recommend that no more than one tweet per day be commercial or people will start to realize what a racket this service is. One tweet per day makes it a daily competition among advertisers to be that Tweet.
Here’s my new trademark: One Tweet Per Day. This trademark is for sale.
I know a very nice lady, a documentary film producer, who has 20,000 followers on Twitter. Her one tweet per day is worth just as much as Ashton’s on a CPM basis — a $20 CPM for $400 per day or $146,000 per year. There is no reason to justify it being any less on a CPM basis, that is unless you could quantify the age group and buying habits of that group. I’m sure that will be next.
Facebook can’t even come close to producing numbers of this sort. And you might claim that Twitter can’t either, but that’s just because nobody has yet tried that we know of. Maybe they’ve been doing it for years and just didn’t tell anyone.
Now what happens when Twitter — still seeking that elusive business model, remember — suddenly realizes that a One Tweet Per Day ad auction is that ideal business model? Keep 30 percent like Apple does ($7 million per year of Ashton’s money) and send the rest on to Demi.
That’s the day Twitter gains an extra zero in market cap and Google makes its grab before that one zero becomes two.
Remember you heard it here first.
Complete non-starter for anyone who might want to retain a shred of integrity and actually wish to retain followers.
What about all the celebrities who are famous for not having a shred of integrity to start with? 🙂
Bob, what value do you find in Twitter as a user? Who do you follow? On Facebook, I have far fewer friends than you and the updates are more than I care to wade through. I imagine on Twitter I’d just be a recipient of other people’s self-absorption.
Is there any data on the extent to which the possibly-nearest concept, movie product placement, worked better or worse since it has become a well known advertising method?
You know how many followers a person has, but that’s no guarantee of consumption.
I Tweet to 5,000 people. Back when I only had 500 followers, that seemed like a big deal.
But the problem for me now is that many of those 5,000 followers are following a lot more people than my 500 followers did.
Subscriptions scale, but attention doesn’t.
If TV tried to sell ads based on how many people owned televisions, they would quickly be laughed out of the sales meeting.
Unless you could enforce the “one commercial message a day” rule, it’d become nothing other than spam noise in about three days.
Domestically this is the best column ever. Why – because my wife has a retail store and she uses Facebook a a medium to get to her customers. I have often ( really often actually) explained that to reach her customers – who want to hear from her – Twitter is the best route. Apparently she got tired of listening and turned around and closed her account.
However, after listening to me recite a portion of your blog she asked how to restart her business account.
Thanks Bob!
I don’t quite see why the “one ad status update per day” model couldn’t work just as well in Facebook status updates.
Facebook is just as much a broadcast mechanism as Twitter, though it does mix that function in with a whole lot more. What’s more, Twitter allows for two way communication – the difference is that in Twitter all the functionality is in third party clients, and therefore ad-hoc/non standard, and in Facebook, it’s all included for all users as part of the default interface.
It costs me nothing to be listed as a “follower” of someone. Not in time or money. In fact if I decide to not follow some one any longer, I simply don’t go back to their “list” of tweets. That’s easier than deleting them. I do pay to receive tweets from someone on my cell via sms at $.20 each, but that fellow decided to stop posting new tweets: twitter.com/computoredge.
You know Bob next time you have a brilliant idea you might check to if someone has already done it. Maybe I can invent a place where people can search for web pages? It’ll be brilliant and make a fortune. I’ll call it Louuuuugle.
See: http://ad.ly/
Yeah, I agree. In addition, I suggest you subscribe to Fred Wilson’s blog, Bob. He covers most of this stuff.
-Erica
I’ve never seen an ad on cringely.com . Now ad.ly is smart enough to detect Adblock Plus (client side, so not rocket science) and tell me to disable it, but of course I’m not going to – I’m just going to move on. There’s plenty of room left to run for the arms race between web ads and blockers, and no incentive at all for me to move to a platform – whether FaceBook or Twitter – that makes blocking much more difficult. I’d be much happier to do micropayments for Cringely articles to put those kids through their expensive schools.
But more fundamentally, why would anyone sign up to get spammed, no matter how much of a celebrity does the spamming? Maybe I’m just too old to get it.
I would say Facebook Fan Pages are every bit the broadcast tool that Twitter is. A good Fan Page will have almost as many fans as Twitter followers (read: thousands and thousands), and prompts new fans to invite their friends! And I bet more of those Fans on Facebook are real people, not “Internet Marketing” Twitter follow-whores and bots.
And if (as it will) my stream gets polluted I can clean it a bit by “hiding” boring posters on Facebook – letting me focus on the posters I am really interested in. Twitter is just a wall of noise (Lists have helped, some). And I can see what my friends are liking and becoming Fans of, which lets me refine my stream even more. Twitter is “social” too, but Facebook has a much better signal-to-noise ratio in this regard.
And you like how Twitter is better than RSS because it sends people to the original website? With Facebook Connect users can be sent to interact on your website and still publish stuff to their Facebook stream!
I would bet that in a study the Cost Per Action conversion is way higher on Facebook than Twitter. Maybe not the Cost Per Click, but definitely the CPA.
Lots of great ideas here, people. I don’t know everything. Heck, my mom argues I don’t know ANYTHING. But I am sure there is real value here in Twitter monetization as I describe. The question is how best to extract that value without damaging relationships. I think One Tweet Per Day accomplishes that handily by limiting supply (increasing demand) while at the same time limiting offense. Of course on that scale what would it be worth for me to not tweet at all??????
What a blatantly stupid post, I was laughing out loud at “Twitter is a broadcast medium and, as such, has value similar to radio, TV, or publishing.” Have you seen the values of those broadcast companies lately? Radio and publishing are dead and TV is following. You had it right when you were trumpeting micropayments more than a decade ago, Bob, this advertising debacle will only be remembered decades on as an iconic example of the economic stupidity of techies and most everybody else.
Making money on Twitter:
Send me $1, retweet and have recipients send $1 to you and $1 to me. Lather, rinse and repeat.
Alternate option: Buy stocks (any company), shut down Twitter AND Facebook, sit back and make money from the increase in productivity.
Yeah before I got to it in this one, I was thinking “slimmed down RSS feed,” which I think Twitter also provides.
I don’t have a Twitter account: instead I peek occasionally at @natalietran to see if she has tweeted a new vid upload on YouTube /user/communitychannel.
I do it for the reason you gave: if she has a new vid, I want to see it NOW! That is, before the typical 0.5-1.5M views and 10k-50k comments from her 642k subscribers and passers-by.
The Mars bar thing is the right idea (sweets); except for Nat, it’s the long ago promised home baked lamingtons (which have yet to appear).
And she has proven longevity already at 23: this really is the New New New Thing. :^) [She won’t tell us how much she’s making, but I guess the remuneration scale is higher stateside.]
@kevinpollak has 170,000 followers on Twitter and a new web TV series that just aired it’s first episode. How valuable do you think Twitter has been to him over the last month?
Great article.
Hi Bob,
Interesting, but I am afraid I didn’t hear it from you first. This stuff has been covered in many other recent blogs, and articles…
BTW… I guess you must have been enjoying yourself, where ever you were going or arrived from… you sounded well ‘oiled’ 🙂
Now you’ve never done a ‘tipsy’ podcast before as far as I know… that IS new!
Take care, Griff
Great article. I think you are correct on all points, except for the excessively large CPM. Your notion at a tweeter’s followers have actualled “followed” them only holds up on a small scale. How does someone who follows 1,000+ people actually “follow” anything at all?
The number you are looking for is “how many of Ashton Whatshisnames gazillion followers are only following 100 people or less.” Because for anyone following more than 100 people, the chances they’re going to actually see any individual tweet start to plummet. I follow about 300 people and I actually see less than 1/10th of all the tweets in my stream.
Even of the people following less than 100, how many of them go on twitter enough to see a decent percentage of the noise coming from those that they follow? Advertising will be hard to price on twitter without at least some view tracking stats.
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While I agree with the bulk and central idea of your article, I do have one nit to pick.
I wouldn’t be so sure that Facebook “has a great monetization model”. If they did, why are they constantly changing it? If the finance people and operations people running Facebook thought they have a good model, why do they keep changing developer constraints and user privacy controls? My only explanation is that they’re trying to force users into using Facebook in a particular manner, rather than observing how it is used and coming up with a business model that reflects it.
Facebook is going to be altavista in seven years, Twitter will be email.
This isn’t new. An example is a guy name Frank Trigg (@franktrigg) only has about 9000 followers. He puts out a few tweets a day. Probably 5-10% or 1 or 2 per day are ads. He does usually include a tag in the tweet to indicate it is an ad and they are fairly low key. I wonder how much his sponsors are paying him, per tweet.
For 9000 people he’s probably getting what – 1000 views max per tweet? Is that worth anything? I’m guessing it’s just something he does as part of his endorsement deals to make him a potentially more valuable spokesman.
Just a little background. Frank Trigg was an elite MMA fighter ( a few years removed from the top of his game) and is a colorful tell it like it is MMA commentator/announcer.
Frank is a good businessman and effective self promoter who has generated a revenue stream lsting past his fighting days. The vast majority of his followers are fans of the MMA community. Nice niche market with dedicated fan base.
Ah, you missed the real potential for profit, which is statistical analysis of Tweets and determination of social trends. What would advertisers pay to find out what people are talking about right now? Probably a lot.
Bob, Twitter is a very different experience when you use it conversationally vs. as a broadcast. I even read an article recently (blanking on the her name) where a lady’s tweets started to get popular, and her followers went from the low hundreds up into the thousands, and she saw how it changed from a conversation to her broadcasting. You can’t have a realistic conversation with that many people, so the nature of the beast changes. With Twitter it’s designed in such a way that you can ignore everyone else and just post your own stuff, you can follow who you want to, you can use it for fun, for business, etc.
As a person on Facebook, you use the app differently than Twitter. In my experience most people either spend all their time doing the games/quizzes, or, more frequently, having jump-in/jump-out conversations with actual friends and acquaintances, and controlling their set of friends and conversations much more carefully than they do on Twitter.
In both cases I don’t know about using them for business purposes. They’re both niche ecosystems, IMO, but sufficiently large enough that some folks will find ways to make money by either using them as a communications tool (awareness, campaigns) or more directly (value-add app or service, payment enabler ala TwitPay, or directly selling items). Neither Twitter nor Facebook is perfect, but both can be monetized, albeit in different ways, and both will evolve.
In terms of worth to a potential buyer, Facebook has more parts to it, and more potential ways it can evolve, so in my book it’s the more valuable. Twitter is simpler and more efficient, but on it’s own it doesn’t do very many things, so you could quickly use it in the short term, but depending on your goal it may take a lot longer to deliver on your objectives. Twitter would be a more tactical purchase if it makes sense to use what’s there, but Facebook would be more strategic, IMO.
I now want a mars bar… good article.
Bob
Are you doing an article on Section 3.3.1: /
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Not in the context of this post, but how do I get hold of you otherwise?
Bob writes this as a person being followed, not a follower. Since there is no reason that anyone should follow me, it’s pointless. On Facebook, it is a great place to keep up with family and friends, but that doesn’t work on Twitter. Whenever I have time to go on my Twitter account, I have to go through a thousand messages to find one that is interesting.
The problem is, if you have 10,000 followers, chances are than most of those followers follow so many people, they are not ever seeing your post unless they just happen to be on when it gets posted. After 2 minutes, it’s pushed off the screen and after an hour, it would take a month to find it.
And for me, there is no one, not even Bob that I want to “follow’. I know where this I, Cringely blog is and I visit it a couple times a week to find out what’s new. Why is the world would I want to sit on Twitter waiting for a post about a new entry when I can check the site now and again.
And anyone who wastes there time following everyone of Brad Pitts entry should be kicked in the head anyway/
To get around one problem you mentioned, I use Twitter’s “lists” in a different way than intended. I put each person I follow in their own “list” and look at that “list” to see only that person’s posts. The other problem is much harder: finding someone to follow. I enjoyed the posts by “computoredge” last year; so much that I paid $.20 each for several sms tweets per week. But he stopped making new posts.
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To put it simply, your idea is neither original or good, Bob. It’s funny how you try to be innovative and protect your ‘intelectual property’. You can go on like that on your hit or miss basis. Maybe you should start playing a lottery? Real money are at stake.
Besides, you mean these little spammy ads no one sane ever clicks put your kids through school? Well, that’s what I call sacrafice for the family’s sake. It’s genuinly sad to me that such an icon as you has to cut off the coupons from it’s popularity. Your ads are evil, one could say. They promore shady online poker games, fake lotteries, and other related stuff. I don’t even know if you’re aware of it. They totally don’t fit your audience, so I wonder how you can cash on that.
The twitter idea is bad, because no one cares about the people they follow as you stated, especially when they follow more than 5 people. It becomes a mess. Besides, advertisers already use twitter for endorsment by announcing promo actions where the people put hash-tags with the name of the product in a contest. They don’t need to pay millions to celebrities if they have free and naive teens at their disposal.
Bob, it would better for you if you did interviews with tech gurus here, instead of writing down ‘your’ boring ideas.
If you haven’t come up with anything interesting so far, you probably never will.
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