Whenever a start-up turns to advertising for revenue, something is remiss.
There has got to be more to a business model than advertising in 2011. The fact that Twitter sees advertising as (potentially) the big revenue pay day, makes me extremely nervous. Why? Because as Twitter adds and tinkers with advertising, what they may not be considering is that the people who are engaged with Twitter are now grappling with advertising (especially if it starts to clutter their streams). It wasn't a part of the initial equation and while all good and free things need to be paid for by somebody, few people appreciate the sudden interruption that comes from advertising. In the case of Twitter, it's also an early indication that they have no clear revenue model beyond the hopes that third-party advertising will drive all monetary results.
Is advertising bad?
Of course not (and please consider the source: me... a Marketer). It's not about the efficacy of advertising as it relates to Twitter. It's much more about trying to re-imagine the power of the platform that Twitter has in front of them and perhaps the marketing and business opportunities that lie beyond the simplicity of advertising. It's clear that the threat of advertising ruining the Twitter experience is real. Look no further than the Fast Company article from yesterday titled, Can Ad-Littered Twitter Keep Its Cool?: "In 2010, Twitter pulled in just $45 million in ad revenue, according to eMarketer. Facebook, on the other hand, pulled in $1.86 billion. Founders of Twitter have been averse to traditional ads, the 'coolness' factor always an important reason why. 'The overall experience [of Promoted Tweets] will hopefully be something that's very native to the network, very relevant, and fitting along with all the other tweets you're seeing,' cofounder Biz Stone told the Associated Press last year. 'If they're not cool, we just won't show them.'"
When Google first introduced AdWords, the concept made a lot of sense: if no one clicked on the ad, the advertiser didn't have to pay. As the AdWords platform evolved and became increasingly popular, the model shifted slightly with the additional pressure being put on the advertiser that if no one was clicking on their ads, they would be booted off of the system. Google's message was clear: if consumers like the ads, they'll click. If they don't like the ads, you don't have to worry because we'll remove you or force you to create a more compelling ad that will get people to click. Beyond that, Google's ads were never a part of the organic search results (they lived either on top of them or to the side). How will Twitter know what is cool? Will it be people clicking on the tweet? Retweeting it? Following the brands? Currently, the idea is that promoted tweets will only appear in the stream of people who have mentioned the brand or are somehow related or interested in the products and services.
It's still advertising... and there's so much more marketing innovation that can be done.
There is gold in the data of Twitter. Just look at what what start-ups like Reach.ly (hat-tip to Paul) and Needium are doing. When Ad Age published the article, Twitter Gets Influx of Cash, Goes for Madison Avenue, on August 1st, 2011 my initial reaction was: "no... don't listen to what Madison Avenue is going to tell you! Don't get lured down the road of eyeballs, impressions and the glitz that goes along with it!" Much like Google (pre-AdWords), Twitter has an amazing opportunity to help us CTRL ALT DEL the world of marketing. To do something more beyond the obvious advertising. To lead in the area of marketing innovation and newer forms of advertising. What if they spent some time away from traditional advertising models (and ad agency folks) and experimented with new ways to connect brands with consumers? They just got a healthy injection of financing (see: Funding Values Twitter at $8.4 Billion), so the opportunity is now.
There's got to be something out of the $800 million that can be carved away for new business model initiatives?