Twitter – Show me the Money

Cash needs to be the number 1 priority at Twitter.

• I am a big fan of the service but I don’t pay a dime for it and I never see any advertising.
• There are several hundreds of millions of people like me and Twitter must start to monetise us properly if it is to be a viable business.
• This, I think, is why Twitter is tinkering with its iOS and Android applications and why I think that it will turn off third party access to its service.
• At the moment Twitter earns money by highlighting tweets when users search but it is failing to monetise the data that it is collecting from the content of people’s tweets.
• This is actually more difficult than it sounds, as it is just a text service.
• Furthermore, I suspect it is impossible when users access the service via a third party API.
• This would be where Twitter has been integrated into other applications such as the contact application on a smartphone, tablet or PC.
• When I look at digital life, micro-blogging is only a tiny fraction of the overall time that a user spends online and hence it can only command a fraction of the monetisation opportunity.
• Combine this with the difficulties in monetising a free, text based service and I can see how justifying a $10.5bn valuation is a real challenge.
• This is what I believe the latest updates to the iOS and Android applications are all about.
• A new top tweets feature has been added where Twitter will add the most relevant tweets to the results of a search.
• It seems pretty obvious that Twitter will include sponsored results and for this it will get paid.
• Hence Twitter is making moves to increase its ability to monetise its service but far more needs to be done.
• This is also why I believe that Twitter will turn off its third party API, forcing users to come to its own applications or its website in order to access the service.
• It is only there, that it can control the user experience in order to add content for which it will get paid.
• This is a baby step but the real challenge is for Twitter to move out of just being a micro-blogging service and to address the rest of the digital life pie.
• Twitter has made moves in this direction with its relationship with American Express, Chirpify and others to encroach into Ebay’s space but I need to see more not to be worried about justifying the valuation.
• Its still very early days for Twitter if it wants to be a major force in the internet and given the amount of work it has in front of it, its far too early to even consider an IPO.