Summary
Twitter has a strong loyal following, provides immediacy and local information. On the other hand, growth has plateaued at 8 million a month (still quite acceptable for many web 2.0 sites). More worryingly, traffic is decreasing and downtime problems are a regular occurrence.
Twitter needs to infuse more innovation in its service, and prove its usefulness as a business, which the data deals and other initiatives are set to do.
Analysis
Twitter turned into a news discovery service, a PR front, and, for many still, a great way to broadcast local news, immediately and interact with others.
Yet, twitter still does not make money, although managed to raise enough to finance itself and was valued recently at $1 billion.
90% of Twitter's budget is set to improve the technology, and sustain growth in mobile and international users such as Brazil, Indonesia and Japan.
Twitter's potential revenue streams have been discussed a lot, and could include all or a combination of:
Yet, twitter still does not make money, although managed to raise enough to finance itself and was valued recently at $1 billion.
90% of Twitter's budget is set to improve the technology, and sustain growth in mobile and international users such as Brazil, Indonesia and Japan.
Twitter's potential revenue streams have been discussed a lot, and could include all or a combination of:
- profiling users from tweets and followers to be able to create highly targeted ads based on context
- subscription model to the most avid tweeters or for specific value-add tweet feeds
- share of SMS revenue from mobile operators using Twitter created application to help increase traffic
With revenue, twitter will be valued very differently by the market. Currently, Twitter is pretty unique, so there is little to compare with, and this might inflate the valuation. Furthermore, lack of business model might just prevent any potential buyer from making a move.
Twitter created a platform, which users filled up and made useful.
To further develop the idea, Twitter is setting the scene to let 3rd party companies use its data, and make the most of their appetite and interest to develop value-add services, by:
- Providing free API, to attract developers who created the best interface to Twitter's service
- Creating lists, to up the value of tweets
- Providing geolocation
- Including authentication of users and accounts
- Brokering agreement with mobile operators in Indonesia, Japan and India to ensure growth in international and innovative markets
- Working with Google and Microsoft to make tweets accessible in the realtime searches of the search engines. With the latest deal between Microsoft and Yahoo!, if these discussions are successful, tweets would then be available to almost all users performing a search.
Twitter is a service, and intelligent applications can run on top of it, which Twitter has decided is best left to people who know most about it, or can advertise it wider (Microsoft and Google) to get to them.
This set of initiatives will therefore help Twitter understand what will actually become a revenue-generating business model.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
