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Twitter Business Model - 8th Wonder of the World
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Twitter Business Model - 8th Wonder of the World

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Why it may be extremely challenging for Twitter to have a business model!

Why it may be extremely challenging for Twitter to have a business model!

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    Twitter Business Model - 8th Wonder of the World Twitter Business Model - 8th Wonder of the World Presentation Transcript

    • Twitter’s Business Model:
      8th Wonder of the World
      Business Model
      30, January 2011
      pj | pj@beingpractical.com | www.beingpractical.com
    • the twitter ecosystem
      tweets
      applications
      users
      www.beingpractical.com pj@beingpractical.com
      beingpractical.com
    • what is twitter’s core product?
      tweets
      re-tweets (more tweets of tweet)
      95 Mn
      tweets per day
      Source: Twitter - http://twitter.com/about - As of 14 Sept 2010
      www.beingpractical.com pj@beingpractical.com
      beingpractical.com
    • who generates the tweets?
      175 Mn
      registered users on twitter
      75%
      applications thatare outside twitter.com
      40%
      from users on mobile devices
      Source: Twitter - http://twitter.com/about - As of 14 Sept 2010
      Business Week - http://www.businessinsider.com/twitter-stats-2010-4
      Smart House - http://www.smarthouse.com.au/Content_And_Downloads/Applications/V5C7D9W9
      www.beingpractical.com pj@beingpractical.com
      beingpractical.com
    • what are tweets all about?
      4%
      4%
      Spam
      6%
      40%
      News
      Self-Promotion
      Pointless Blabber
      9%
      Pass-along value
      38%
      Conversational
      Source: Pear Analytics - http://www.pearanalytics.com/blog/wp-content/uploads/2010/05/Twitter-Study-August-2009.pdf
      www.beingpractical.com pj@beingpractical.com
      beingpractical.com
    • do tweets get attention?
      71%
      get no reaction
      23%
      get replied
      6%
      get re-tweeted
      Source: Sysomos- http://sysomos.com/insidetwitter/engagement/
      www.beingpractical.com pj@beingpractical.com
      beingpractical.com
    • what is a life-span of a tweet
      Fractional!
      it depends on:
      1. number of followers you have
      2. % of your followers online at that time
      3. rate of tweeting of people followed by your followers at that time
      Fractional tweets are seen.
      More fractional tweets are read.
      More fractional tweets are responded (replied or re-tweeted)
      www.beingpractical.com pj@beingpractical.com
      beingpractical.com
    • twitter’s current business model
      have 3 business offerings:
      - Promoted Tweets
      - Promoted Trends
      - Promoted Accounts
      All of these business offerings appear on Twitter.com, while
      - 71% tweets go without any reaction
      - 75% usage of twitter is outside of twitter.com
      - No context or relevance is applied based on user demographics
      (Sitting in India I see all US centric promoted tweets, trends & accounts)
      - Users who geo-tagged their tweets are minimal.
      www.beingpractical.com pj@beingpractical.com
      beingpractical.com
    • twitter’s revenue
      $140 Million
      According to internal documents leaked and published on TechCrunch, expected revenue for 2010
      Twitter’s Business Model
      ?
      - Promoted Tweets
      - Promoted Trends
      - Promoted Accounts
      $140 Million =
      Source: TechCrunch- http://techcrunch.com/2009/07/15/twitters-financial-forecast-shows-first-revenue-in-q3-1-billion-users-in-2013/
      www.beingpractical.com pj@beingpractical.com
      beingpractical.com
    • twitter’s revenue
      Twitter’s Business Model
      $46 Mn
      - Promoted Tweets
      - Promoted Trends
      - Promoted Accounts
      $140 Million =
      $46 Mn
      $46 Mn
      Assuming 33% revenue generation for each offering – they have to generate $46Mn per year
      $46Mn per year = $125,000 per day!
      That’s Expensive!
      But that may be true!Clickz – McDonald’s all day promoted trend costs around $80,000
      Mashable– Mentioned reports from Wall Street Journal speculates promoted trends & tweets costing upwards of $100,000
      TheNextWeb– Promoted tweets are sold for $100,000 or more
      ReadWriteWeb– Again quoting the Wall Street Journal report
      Source: Clickz- http://www.clickz.com/clickz/news/1869732/mcdonalds-mcrib-twitter-cooks-salty-comments
      Mashable- http://mashable.com/2010/09/27/promoted-tweet-pricing/
      TheNextWeb- http://thenextweb.com/socialmedia/2010/09/27/twitters-promoted-tweets-already-a-failure/
      ReadWriteWeb- http://www.readwriteweb.com/archives/twitters_promoted_tweets_sell_for_100k_and_up.php
      www.beingpractical.com pj@beingpractical.com
      beingpractical.com
    • twitter’s ecosystem is valuable,
      but cannot be monetized!
      tweets
      -> most tweets are blabbers, pointless
      -> user tweets are not intents like search keywords
      tweets are meant for others, not self
      -> user tweets with intent, the intent may not last for long
      the tweet itself is in social context, and may be intended for others
      -> twitter needs to discover the intent and push an advt to user as reply,
      but – that will lead to tweet spam, users will protest
      – its very difficult to decipher purchase intent from a tweet
      www.beingpractical.com pj@beingpractical.com
      beingpractical.com
    • twitter’s ecosystem is valuable,
      but cannot be monetized!
      applications
      -> twitter has indicated it will not allow applications to monetize tweets
      -> twitter cannot monetize applications by charging them 75% tweets are from apps, twitter is more dependant on it
      -> if twitter starts monetizing individual tweets, they will need to
      credit the applications that completed action.
      www.beingpractical.com pj@beingpractical.com
      beingpractical.com
    • twitter’s ecosystem is valuable,
      but cannot be monetized!
      trends
      -> most of the times natural trending topics are consequences of - offline news events
      - big announcements by brands/ companies / individuals
      -> a promoted trend may not cause same impact amongst users
      -> if twitter continues with promoted trends – this is model is not scalable. at $100,000 per day it will appeal only to a small segment of advertisers
      www.beingpractical.com pj@beingpractical.com
      beingpractical.com
    • twitter’s ecosystem is valuable,
      but cannot be monetized!
      users
      -> most followed twitter users are celebrities or big brands that have pulled more users to twitter. Twitter will not have been the same without such users.
      -> twitter will continue to offer ‘featured users’ and ‘verified accounts’ there may not be a business model here
      -> there may be little value to businesses for ‘promoted accounts’ to gather users to whom tweets may not relevant or received
      www.beingpractical.com pj@beingpractical.com
      beingpractical.com
    • twitter’s other business models!
      ecommerce
      -> product recommendations, purchases, reviews are already getting posted as tweets by users. Twitter may not be able to add more value in this! Twitter is not an affiliate or an ecommerce seller like Amazon
      analytics
      -> thanks to twitter API, there is not much analytics that twitter can provide which its API cannot.
      news
      -> twitter is anyway used by newspapers and users to break/share news
      key news become trends. there is no business model here.
      www.beingpractical.com pj@beingpractical.com
      beingpractical.com
    • twitter’s is trying to discover a new revenue model that fits is eco-system.
      although the ecosystem may be of value,
      the challenge to monetize it will be a remain for a long time. may be for always!
      twitter’s business model will surely be
      8th wonder of this world
      www.beingpractical.com pj@beingpractical.com
      beingpractical.com
    • Fail Whale Wallpaper. Image credit – Cheth Studios
      #thank-you
      Note: All thoughts, concepts mentioned and views expressed are made in personal capacity.
      www.beingpractical.com pj@beingpractical.com