Commentary

How Twitter Could Make Money

by Joe Marchese , August 11, 2009

Here's this article in a tweet (less than 140 characters): "Potential Twitter business model: unlock massive mobile marketing dollars by using tweet content and GPS."

Imagine you are walking past a Starbucks and on your phone pops up a coupon/advertisement for coffee. I am not sure about you, but my reaction would likely be one of three:

1. "I don't drink coffee" (I know I am in the minority on this one).
2. "I pay money for my mobile service, why the heck am I getting ads on my phone?"
3."Just because I am near a Starbucks doesn't mean I have time for a coffee."

There is no guarantee of advertisement relevance based simply on proximity. And people's mobile devices are far too personal to risk delivery of annoying ads. Then, of course, there is people's expectation that since they pay for their mobile service, there is no implied contract with providers that they would be willing to accept advertising (in fact people pay for EVERYTHING under current wireless contracts, ironically including the data usage to download advertisements ?). Ahhh, the dream of GPS-targeted advertising on mobile devices: so much promise, and yet so many flaws.

Now let's add Twitter to the equation. Twitter adds two extremely key elements that could make mobile advertising a massive market: context and a free service. The idea that Twitter is a service that I use for free gives Twitter some ability to ask for a small amount of people's attention in exchange for a service that they value. And it really won't be asking much if it can make the advertising it delivers highly relevant.

How can Twitter be so relevant? Because it has an opportunity to determine context for an advertisement. Imagine I send a tweet that includes "it's really hot out here": this can provide context for an advertisement (say for an iced coffee). lf I am tweeting from a GPS-enabled phone, you can now layer on my location to serve me a geographically and contextually relevant advertisement after I complete my text. Additionally, people tell Twitter about themselves, either explicitly through account info or implicitly through all of their tweets, so Twitter can layer on demographic and behavioral targeting (have I ever tweeted about coffee before?).

The marketplace for advertisers could work just like Google AdWords (yet another reason "Why Google Will Buy Twitter...") Advertisers could buy key words or phrases that are tweeted, based on geographic location and potentially a Twitter-user's profile info. So if I was Starbucks, I might buy all Tweets including key words coffee, tiered within 100 feet of a Starbucks location. This does require that GPS location is turned on, but another application that I have been using quite a bit is called Foursquare. It is incredibly addictive to be able to check in with GPS, and a lot easier then manually entering my location on Twitter.

The next question is, how should the marketer pay for delivery of such an advertisement to such a perfect target? Well, I don't want to solve all of Twitter's problems in one column, so what do you think? CPM? Redeemable coupons on mobile devices? Clicks? Drop me a line on Twitter at www.twitter.com/joemarchese and comment below.

social media

9 comments about "How Twitter Could Make Money".

Check to receive email when comments are posted.

Mike Patterson from WIP, Inc., August 11, 2009 at 11:33 a.m.
Great commentary Joe and I think a feasible idea for sure. It may be as simple as following a specific Starbucks location and JUST getting geographic tweets from that location when you are nearby. Of course you couldn't bring other advertisers into the fold that way so another solution would have to adopted for that...mobile is such a personal medium so I'm not sure users are going to put up with too much third party information.
Lastly, I think marketers should pay for performance, DR style...action = $$.
Reply

Andrea Sharfin from MIcrosoft, August 11, 2009 at 12:07 p.m.

Really interesting, and I'm sure something Google has thought about. I like that you refute the idea that "I'm walking by a Starbucks and it sends me a coupon to my phone" is such a great location-based service. Why would advertisers pay for that, when a sign in the window is probably far cheaper, re-usable, and so easy to obtain? I think sometimes people who evaluate advertising technologies overlook great substitutes. It's nice to see someone paying attention to this.

Brian Shepherd from The 31 Group, August 11, 2009 at 12:27 p.m.

Joe, interesting article, but I'm not sure it solves two of the issues you had in the first place. You tweeting that "it's really hot out here" doesn't address the fact that you 1) still don't drink coffee, and 3) that you may not have time for a coffee even if you were near a Starbucks. Twitter should allow you to provide basic information to help - you don't drink coffee, but like tea, you are a vegetarian, planning a trip in the next 30 days, etc....

Great to hear you thinking about it however, I imagine they need to start figuring out a business model.

Huayin Wang from Accuen Media, August 11, 2009 at 12:41 p.m.

Thanks for the excellent article. To be sure, twitter does provide great advertising contexts - not one but many, including WOM and social recommendation. However, I do not see buying keywords etc. In SEM, advertisers pay for keywords so that their ads can be shown in browsers and therefore viewed by the searchers. In case of twitter, what are you paying for? A tweet is not a search and may not be viewed from the browsers.

Digital CRM or Social CRM? Now that is an interesting story! Fortunately or unfortunately, advertisers do not even need to pay - not for tweets that match to certain keywords and not even for replying/sending tweets to others. All they need is - well, that deserves a whole new column to address I guess :)

Cc Chapman from Never Enough Days, August 11, 2009 at 12:47 p.m.

I think the concept of context/location/personalized ads as you are laying out here is a smart one and one that while I'm not sure if Twitter is the right technology for, the concept is still something I believe we are going to see very soon indeed.

Paula Lynn from Who Else Unlimited, August 11, 2009 at 12:50 p.m.

By far, you are not the only one who does not drink coffee. And it seems like the pin on which the fairies are dancing is getting crowded. To invest in Twitter for the forsable future would certainly aid in a tax loss write off. Subprimes anyone?

Jim Dugan from PipPops LLC, August 11, 2009 at 2:58 p.m.

To answer you last question, Joe, redeemable interactive mobile e-coupons on your mobile device such as our system - www.GripOffs.mobi.

Any Starbucks can create the ad for the location, offer the special with a barcoded mobile e-coupon, change it anytime, at will, and allow all of us on the go the opportunity to go to one site and choose the preferable deals to receive instant savings at the point of purchase.

That way, we can go to one site to search for 'coffee shops' if that's what we want and bring up all the ones in the area with a deal for us.

While we may be thinking Starbucks, but if we like Dunkin' Donuts is offering an excellent, say, 2 for 1 deal, it might influence your buying decision.

And, this type of program could be incorporated into a Twitter type application. In fact, GripOffs is on Twitter and we're just launching.

While it doesn't make any money for Twitter, it makes money for GripOffs from the Advertisers who support the system by using and paying for their postings while acquiring a whole new database of customers with whom to engage and the Users (all of us) benefit by saving money on all of the deals in the area of interest to us.

Of course, the environment benefits, as this is an entirely paperless system, that costs nothing to the user in the way of text costs or other. The only thing the User needs is a web-enabled mobile device.

Alison Groves from Raven Internet Marketing Tools, August 11, 2009 at 4:37 p.m.

Wasn't this the plot of a Tom Cruise movie?

Joe Marchese, August 11, 2009 at 6:45 p.m.

@Alison - Top Gun?

@Daron I don't know. You could easily rate limit it to once per every 5 tweets. Also, I would be very interested to know what things/offers are available in my general area, especially if it was related to my last tweet. Finally, the user experience would be key. The offer/ad would come after submitting my tweet, so as not interrupting my flow and if I just ignore it, it goes away. Full intgration into twitter applications would be key...maybe they could even do this on their own.

@brian the "don't drink coffee" issue could potentially be addressed by my tweet history, or my profile that twitter could build up. A simple "did this offer make sense?" option would help me refine.