Commentary

Twitter Comes to Madison Avenue, But Where's the Model?

Twitter appears to have settled on an ad-supported business model, and it wants your advertising dollars: according to the New York Observer the micro-blogging service is moving into new offices at 340 Madison Avenue (previously inhabited by Facebook, which has since relocated to 335 Madison Avenue). From here Twitter sales staff will surely extend offers of lunches, drinks, pony rides, and other micro-junkets to anyone who happens to control millions of advertising dollars in a half-mile radius. But just remember pony rides can be a two-way street: they will probably be picking advertisers' and media planners' brains for ideas to make Twitter profitable.

No question, Twitter is a phenomenon, jumping from 75 million global unique visitors in January 2010 to about 200 million global visitors at the end of January 2011. The growth in U.S. visitors has been even more impressive, from 25 million to about 90 million visitors over the same period. The demographic breakdown of Twitter users makes them a desirable audience as well, with 26% earning $75,000 or more per year. 27% of Twitter users log in every day, and 25% are already following a brand, according to stats compiled by Digital Surgeons; within the group of brand followers, 67% said they will purchase that specific brand.

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Those last statistics are especially hopeful: basically, there has just got to be some way for Twitter to make money off of advertising. And some of the initial experiments, e.g. "Promoted Tweets," have produced promising results. But the fact remains that -- five full years after launching -- Twitter still isn't making money: total revenues probably came to $50 million in 2010, and after claiming profitability in the early part of the year, execs backed off this assertion in September.

Meanwhile Twitter is projecting total revenues of $150 million 2011, somehow growing to $1.53 billion by 2013; this would require total revenues tripling every year for three years, which isn't impossible I suppose -- you see, that's where all you smart advertisers and media planners come in, and tell them how to make it all work! Well, what are you waiting for?
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