Twitter's Bad Idea

Twitter is searching for a way to make money -- a prerequisite for a Bubble II IPO.  An idea it's been pushing since April is something called promoted tweets -- auctioning the rights to place advertising at the top of popular Twitter streams.

Google places ads -- why can't Twitter? One big fat reason:  Twitter's ad imposes itself into a discussion among real people. It's as if you held a dinner party and an uninvited stranger barged into your house screaming self-serving non sequitors -- and you can't get rid of him. A search ad has the potential to help you; a "conversation ad" is simply disruptive. 

Promoted tweets appear to be directed at the B2B space. Only one problem: Forrester's research indicates that Twitter possesses very limited influence over B2B transactions, at least in the technology space. Twitter influences one half as many Business Technology (BT) buyers as Facebook, and only a third that of LinkedIn. You can find a very short precis of the report here. Promoted tweets are a bad idea on many levels -- Twitter should scrap them and head back to the whiteboard in search of a less intrusive way to justify its irrational market valuation. I'd love to get your comments...

Comments

Assessment is right on

Your assessment is right on. That said, would love to know what you think the revenue model should be. Thank you for the post.

Get used to those Twitter ads

Twitter has to find a way to make money -- just like Facebook and Google and Yahoo. It's a heck of a lot better if it makes that money from advertisers than from charging users.

Promoted tweets don't get in the middle of conversation any more than paid search results "get in the middle of" natural search or display ads "get in the middle of" the news in the New York Times. It's just that we've gotten used to those other ads -- meaning we know how to read them and how to ignore them.

In my opinion (I'd say "in my humble opinion" but nobody ever called me humble) the problem is that the ads look TOO MUCH like tweets. I'd be happier if the ads looked more like ads. Then people would read them or not, just as they do with any other ads. Twitter needs more advertising.

The problem with promoted Tweets...

There's a big difference between promoted tweets and ads in the New York Times or in Google search. Tweet topics and streams are created by the users -- they are private ideas and conversations. Ads in the Times work because that company created value (the articles), so readers will put up with ads. Same goes with Google -- that company deployed its amazing algorithms to get the users accurate search results -- so the user will put up with the ads. But let's say you created a conference, let's say SXSW as an example. You spend a lot of money getting people to your conference, you rent a facility, and you create a hash tag for the conference, #SXSW. The attendees (and others) now use Twitter to talk about the conference and the content, but there's an interloper who bid to persistently appear at the top of that stream -- a very, very strategic spot. That's unfair to the content provider (SXSW) and disruptive to the Twitter users. Ads only work when there's a fair trade at work. In the promoted tweet case, that's not the case.

What Twitter "should" do

I think a lot of the disagreement comes from what you mean by "should" -- as in "Twitter should scrap promoted tweets."

One meaning is: they should stop promoted tweets because they are annoying. But of course, companies do this all the time -- they want to make money and if that means annoying people and has no other bad consequences, they'll do it. (Otherwise companies would spend twice as much as they do on customer service and there would be no ads on television.)

So -- the real question is, what should Twitter do to keep its business successful? If promoted tweets are sufficiently annoying that people will stop using Twitter and go to a competitor (Google+, Facebook), then sure, they should stop. But I've seen no indication that people are deserting Twitter over promoted Tweets. Twitter effectively owns the market for its own little quick-update world.

Perhaps the revenue potential of promoted Tweets isn't sufficient to create this annoyance. This is why I suggested a model that makes ads look like ads -- less annoying, potentially more revenue.

In the end, my point is that Twitter owns this ecosystem -- they built it, they grew it, they decide how it works. SXSW doesn't "own" the hashtag #SXSW -- Twitter built the railroad and they make the rules about what trains can do and can't do. Twitter owns that hashtag, and every other hashtag, they own the client software (they bought iPhone apps and Tweetdeck), they own the experience, they own the whole damn world they created. They can do what they want with it, even though it may not seem fair to an event using a hashtag.

You could make a similar argument that Facebook "should" respect privacy more -- many, many people have -- but what finally will get Facebook's attention is if people switch to Google+ for improved privacy controls. Short of regulation, competition is the only thing that changes the minds of social networks about their policies.

Twitter's dilemma

OK Josh, by your logic we can imagine that Verizon will soon be listening in on your cell phone calls and selling the opportunity for advertisers to shout out promotions "Buy at Wal-Mart!", "Special two for one at Starbucks!" in the middle of your conversations. After all, Verizon "...built the railroad" so they can make up the rules.

Twitter (and Facebook) are both facing a difficult dilemma. Neither company has added any value beyond creating the container -- the value (content) is provided exclusively by the users. In effect Twitter and Facebook have created "private spaces", sort of like your cell phone call, and they must tread very, very delicately if they are to invade those private spaces with ads. I actually like your idea of differentiating ads on Twitter from tweets -- this might look less intrusive.

Your logic about Verizon!

Your logic about Verizon! Well if Verizon offered free service I bet people wouldn't mind a shout out from Wal-Mart. With free come ads If not initially, eventually.

Twitter is such a different,

Twitter is such a different, unique platform compared to the likes of Facebook, Google, etc. It's meant for mobile; mobile is in Twitter's DNA. Therefore, I'm not sure ads are fit for Twitter. I'm sure businesses and Twitter will disagree, as advertising helps answer the "How do I measure social ROI?" question. As a consumer, I don't want ads in my Twitter experience. On Facebook, I don't mind; in fact, I rarely pay attention. I am all for paid advertising, just not so sure about this particular platform. My Twitter feed is already too busy that ads will just become additional clutter.

Information overload

What makes twitter successful is that people are forced to compress as much info as they can in a small space. How many people are capable of switching back and forth between tasks quickly. I'm imagining your twitter feed is likely focused on a few things, otherwise, it would be difficult to extract information from it efficiently.

Point is, if ads are going to work on twitter, I think it will be VERY important that they be tightly focused on the feed they are being inserted into.

Twitter - not for long term relationships

Not surprising. Research from ITSMA's How Customers Choose Solutions Providers shows that relationships are important in influencing IT Buyers. It's much easier to go deeper and build relationships on support & discussion forums than on Twitter.

http://www.itsma.com/research/how-customers-choose-solution-providers-2010/

Editorial Integrity vs. Revenue

Twitter is growing tremendously (full disclosure: I'm a huge fan and user), but it also faces many challenges from new competitors in the social media space (even as an "information and interest network") to the strategy for driving revenue. In many ways, the company is facing similar obstacles that many in the traditional publishing and even web-based "publications" face: editorial integrity vs. revenue. The whole ecosystem will continue to evolve, but in order to do that the company must make money instead of just raising it based on venture capital and angel investors ... unless they do indeed plan to build-up the business to be sold. They can't go public without a more solid business strategy with financial results. While I am skeptical about embedding the promoted tweets in discussions and streams, it seems like the logical thing from a business perspective. Will it initially be distracting and annoying? Likely. I think that it will essentially follow the path of banner ads. Good ads are relevant, timely and focused on the audience. Others are ignored (ie. desensitized users). Like banners ads, there is growth ahead with big opportunities ... if it's done correctly. Perhaps banners and promoted tweets will work together to make quality a bigger focus, with good creative and proper calls-to-action. I'm ready for Super Bowl quality advertising each day, not just during the big game. TBD!

I welcome feedback. Twitter: @IanGertler

The main product of twitter

The main product of twitter is its communication api's that scale. It should just ask all developers for 30/70 split (apple style) and ask them to go crazy with its api's, have an ad network that understands its users well and targets ad's accordingly that developer can use on their clients and benefit from the goodwill this communication medium add's to the world at large.

Twitter cynic

I feel like you do that Twitter had its moment because of its uniqueness, but in the end it's one-dimensionality will cause it to be overtaken by the platforms that offer something similar but also have far richer features. I use Twitter because of its population, but would rather use something with more functionality than putting out 140 characters to the world.

Promoted Tweets annoy me, but...

Promoted tweets annoy the vinegar out of me but I don't think they get in the middle of the conversation because:
1. Search terms are not conversations. Search terms don't always represent a conversation. Sometimes is just a list of random tweets that all have the same keyword.
2. The promoted tweet hangs above the conversation. It is not in the middle of the conversation, although I bet there are firms that would love to auto interject tweets in the middle. The promoted tweets are at the top. It is easy to ignore them.
3. Twitter has numerous options for displaying promoted tweets. Promoted tweets are new. Twitter has many options about how they display relevent content in the future. For example, based on a search column in Tweetdeck you could set up related content on YouTube or other video content or display ads or suggest other keywords etc...

I think Twitter has an enourmous revenue opportunity but they need to move slowly so they don't alienate the early adopters. Facebook and Linked in did it. So too can twitter.

These ads are just not

These ads are just not engaging enough. They try to look hip and address trending twitter topics but it's a false engagement. People are not so easily fooled. Twitter ads should give incentive, like RT this ad and you will be entered to win a prize.

It's not the best way to do social marketing

As you rightly point out George, promoted tweets are disruptive in a destination where conversation is the expectation (though I don't know how much of Twitter is really conversation, more like a big fire hose of comments). Companies can use Twitter in many more effective ways for customer service, market intelligence, events, CRM, and public relations - and therefore Twitter should be able to find more revenue channels to support those efforts.

However, most of the promoted tweets to date have been in search results and the marketers we've spoken with have had success creating conversation around them - think movie studios generating buzz for new releases. Twitter is now testing promoted tweets within the main stream, which could be a mistake in customer experience. I agree that promoted tweets need to be more transparent as ads. And Mike G. hit the nail on the head in that Twitter could do this without hurting the overall experience. But paid ads do offer marketers the scale and immediacy that organic social media activities don't typically have, so we recommend companies use them to catalyze their existing social efforts. Right now this works better in Facebook than Twitter, but over time I believe Twitter will find a way to make transparent ads that don't disrupt the user experience too much.

Perhaps there's a better way

The ads on all sites--Google, Yahoo, Facebook--are annoying but like you said we've gotten used to them and know how to ignore them. I realize that Twitter does need ads to provide revenue so that they don't charge users; however, there has to be a better way than inserting them into conversations.

http://www.fionndownhill.com/

Why not adopt the Google model?

Is there some reason why Twitter couldn't adopt an AdWords model and serve advertising in a sidebar (clearly marked as advertising) that was based on the content of the tweets, and/or locations of the tweeps in the stream?

Twitter's API is so useful to

Twitter's API is so useful to so many thousands of small businesses, that I think an obvious way for Twitter to make money is to somehow charge money to people to follow certain accounts. This payment platform can even split up money with developers, giving Devs even more of an incentive to use Twitter as part of their service. I think that Twitter shot itself in the foot with advertising with regards to focusing on large brands because so many other alternatives such as http://twitter.popularfans.com have cropped up. The minimum ad spend necessary to get on Twitter is prohibitive to most businesses and this has encouraged all kinds of advertisements on Twitter that lead to Twitter making no money from it. Twitter could dominate local if it enhanced the discoverability of their powerful location based search and other features.

Context is a factor here

George, I agree with your assessment that promoted tweets may not work in a B2B setting. But B2C? That may be different. Virgin America has used promoted tweets, and Virgin America says they help generate sales. In fact, the airline has credited its use of promoted tweets to recording some of its most successful selling days.

I suspect that context will play a big hand in the usefulness of a promoted tweet: Who's the advertiser, what's being advertised, to whom, when -- and who's reading that promoted tweet.

Business Use of Twitter

Great write-up. You are absolutely right - Twitter has a very limited B2B use. I don't think the problem is in lack of functionality and can be solved by adding a "silver bullet" feature. I believe the problem is that most of business and even marketing executives don't know exactly how their businesses can benefit from Twitter in a meaningful way.

I have been using Twitter for a while and only recently started figuring out ways of benefiting from it in a business sense. In fact, I just blogged about it: http://www.hack-marketing.com/2011/08/7-steps-for-turning-twitter-into.html

If I was running Marketing for Twitter, I would focus on the message for the existing product. I would develop specific best practices on how to benefit from Twitter for business and marketing executives - both for B2B and B2C settings. Then, I would use social media (including Twitter) to deliver the message. I think there is a lot money Twitter is leaving on the table by not doing this.

Professional Social Networking Sites

George,

I'd love to have you break out the Professional Social Networking Sites that you've grouped together in your graphic above. Please expand.

Thank you
Anna Mathieu
Redfish Technology

twitter ad feeds

i see a promoted ad in my twitter feed, i @ back to the advertiser to tell them i don't like their ad placed in my twitter feed. they aren't going to like that.