Twitter Eyes Search as Means to Monetize

Look Who's Talking Now: Plan to Parlay Real-Time Advantage Into Revenue

By Published on .

NEW YORK (AdAge.com) -- When twitter closed on a $35 million round of venture capital, in addition to the $20 million it had already raised, the messaging service signaled that it intends to be a very big business.

Like its 6 million users, corporations have embraced the service. Its ability to take the measure of what is being said at a given time about brands is a potential gold mine for marketers, and it is the first place Twitter will look to generate revenue.

Colton Perry, NetPlus senior VP-technology
Colton Perry, NetPlus senior VP-technology
"There are companies and brands depending on it more and more and finding the insights valuable in how they make decisions," said co-founder Biz Stone. "What further can we do to help them?"

But selling services to corporate America isn't the kind of Google-scale business Twitter's founders and backers are banking on. What is? Well, maybe search. Last summer, Twitter bought search engine Summize and has recently started integrating search into certain user accounts.

Federated Media CEO John Battelle likens Twitter to YouTube, in that Google thought it was buying a video platform, but YouTube's real value may be that it has become the second-largest source of search queries. The difference is Twitter enables a search of real-time sentiment and conversation.

"Twitter owns its own search, which is more valuable than Twitter itself," said Howard Lindzon, an entrepreneur who launched one of a proliferating ecosystem of Twitter-based businesses, StockTwits.

'No rush'
At this point, all ideas are still at a whiteboard stage. Twitter hired its first business-development exec in January, and Twitter's new funders -- Benchmark Capital and Institutional Venture Partners -- want Twitter to continue to focus on growth before revenue. "It is a big, emerging media property growing at a phenomenal rate," said IVP General Partner Todd Chaffee. "Frankly, I'm in no rush to resolve these issues."

One thing Twitter isn't pursuing is traditional advertising. "We're just not looking at it right now," Mr. Stone said, "not just because we don't know how it would be received, but it would require a team we just don't have."

In a sense, Twitter faces the Facebook problem in that it has created an ecosystem of Twitter-based businesses from which it does not profit, and marketers don't need to pay to use the service. Benchmark General Partner Peter Fenton said that's really not a problem. "The more applications built on top of Twitter, the more valuable Twitter is," he said.

Of all the ideas now under discussion, the one that seems a no-brainer to Twitter and its backers is the idea of "verified" accounts. That would allow users to pay to reserve a Twitter handle and certify that they are representing a corporation or an individual. "That is a great concept, because one of the challenges with social media is 'Who is real?'" said Frank Eliason, director-digital care at cable giant Comcast.

Comcast has an entire team that interacts with Twitter, including Mr. Eliason, who tweets as @ComcastCares, but also staffers such as @ComcastBill, @ComcastGeorge and @ComcastBonnie. But there's nothing stopping anyone from registering their own "Comcast" handles, which is why Shaquille O'Neal tweets as @TheRealShaq.

Similarly, corporations could pay for their own secure, private Twitter to communicate with employees or fans of their brands.

Overheard conversations
The other idea that seems obvious to Twitter and its backers is offering paying customers real-time data on who is saying what about a brand. "What struck us is it gives you an immediate view into what people are thinking or saying about your brand right now," Mr. Fenton said. "There is any number of revenue models that could emerge from that."

Scott Monty, global digital communications manager for Ford Motor Co., said the automaker would be interested in, say, age and geographic overlays atop metrics. "It would be great to know who we are talking to on Twitter," he said.

When Ford brings the new Ford Fiesta from Europe to the U.S. next spring, it will pitch the car to millennials. Twitter's average age is well in Gen-X territory, and Mr. Monty said Ford would communicate differently with younger buyers in that demographic.

While Twitter professes to be in no hurry, the band is being beaten to market by others building marketing services around Twitter. One example is Philadelphia-based digital agency NetPlus Marketing, which has its own Twitter-management software, Platform T, that allows marketers to manage multiple accounts, a Twitter scanner and a scheduler that lets them send scheduled tweets. NetPlus doesn't charge for the service but requires users to apply for an account. "We are trying to make Twitter easier and more manageable for our clients," said Colton Perry, NetPlus senior VP-technology.

Search could be valuable for Twitter, or whoever ends up owning Twitter. Mr. Battelle argued that Google and Yahoo haven't added Twitter search because they don't want to make Twitter any more valuable than it already is. But the question is how to turn it into revenue without turning off users in the process.

Now that the funding is in the bank, Mr. Stone said Twitter's first order of business is to increase staff, probably to 60 in the coming year, and then start conversations with brands about the kinds of services they'd be willing to pay for. "We are growing like crazy and kind of shockingly low on employees," Mr. Stone said. "At the same time, there is so much work to do that it's scary."

In this article:
Most Popular