Popular Dishes

Monday, April 19, 2010

Twitter and social networks: when having millions of customers is not enough - Part 1

Twitter glitters. This online company operating in the field of micro-blogging attracted more than 100 million users in roughly four years and managed to raise $57 million from venture capitalists. Yet, Twitter is not gold. Millions of users and a huge amount of traffic are not enough to generate money, and so Twitter is not making a single buck out of its impressive business. So far, it has chosen to pursue growth and service improvement at the expenses of profitability, as other social networks have. But things are now changing. A few days ago Twitter decided to launch its own advertising platform: promoted tweets will be placed in Twitter’s search page and possibly in a user’s Twitter stream.

Placing advertisements alongside a page’s content has always worked fine for Google, why shouldn’t it work as fine for a social network such as Twitter? Well, because social networks are not search engines. When people go to Google, they are looking for something and they spell it out. Here is how Google is able to display the right advertisements and catch clicks. When people log in to a social network instead, they just want to share a thought or know what other people are doing. That’s why advertisements on social networks are not as valuable as on Google.
As a result, advertising alone is not the cure-all for the profitability of social networks. What should Twitter and other social networks do then?

(Cross-blogged on behalf of Alberto Marcuzzo)


Prahan said...

Build it and they will come... one used to say...!