Look out for a “fascinating..completely non-traditional …really cool…awesome” advertising strategy on Twitter early next year, as the microblogging service finally begins to monetise directly its tens of millions of users.
That sounds like sensational advertising, or self-promotion, in itself, from Dick Costolo, Twitter chief operating officer. He used all of those adjectives onstage on Friday in an interview at the Realtime Crunchup conference in San Francisco.
“You will see an advertising strategy from us in the very near future and I think that it will be fascinating and completely non-traditional and people will love it,” he said, addressing questions on Twitter’s business model.
The San Francisco company has done little to generate revenues from its service so far, but has been flirting with ads – displaying a promotional spot on its home page for Twitter-linked services and striking a search deal with Google and Microsoft last month that should lead to a share of revenues if ads are shown next to results.
Mr Costolo said Twitter’s own ad solution would be similar in intent to Google’s.
“The genius of the Google [ad strategy] when it first rolled this out is that [the ads] were also the kind of things people were looking for, so we want to do something that’s organic and in the flow of the way people already use Twitter, and not here’s the tweets and here are the ads.”
It would be really cool, awesome and probably appear early next year, he added.
The COO said Twitter was currently earning revenues from “a variety of sources” and had revenues higher than a reported $4m a year.
That still sounds small potatoes, but Mr Costolo went on to describe a number of ways where Twitter would soon make money.
“We are going to syndicate our data to other partners who have their own business models,” he said, referring to Twitter going beyond the Google and Microsoft deals.
There were tens of thousands of partners in the Twitter ecosystem, such as companies carrying out data-mining for brands, that could be provided with a mechanism to leverage the data on Twitter, allowing those partners to make a lot of money, he said.
You can imagine Twitter charging a licence fee or getting a share of revenues from this approach.
The data produced by users’ tweets is getting richer, with new features being added, but it is not always accessible to third parties. There has been a rush of innovation from the company in recent weeks – lists and a retweet section have been added and the format of retweets has been changed. Geolocation was enabled on Thursday and Mr Costolo described the ability to place locations of tweets as a huge opportunity.
Twitter has also been taking steps to tackle a significant slowing of its growth in the US (“All services have dips and we need to work our way out of it,” said the COO). It is making the service appear less challenging to newcomers.
Mr Costolo said research had shown that some new users were put off by the “What are you doing?” question that greeted them above the status box.
“A lot of people would look and say: ‘What am I doing? I’m not doing anything.’”
The question has now been changed to “What’s happening?”
The Twitter executive, who joined the company at the end of August, said comScore reports of 58m Twitter users underestimated the actual number, which he did not reveal.
Twitter had received $155m in funding to date and had “about a buck eighty left”, he joked. The startup still employs less than a hundred people and appears very comfortable with its cash burn.
There is clearly money to be made by Twitter from businesses wanting a premium service.
Mr Costolo said there would be service level agreements (SLAs) that would allow them to do more sophisticated things, such as multiple authoring of one account.
“There’ll be a commercial accounts package and one of the fundamental features of that for businesses will be an analytics dashboard.”
This would be rolled out in the “very near future”, he said.
