At a dinner tonight with a friend the conversation turned to Twitter. He just didn’t get it, and he’s certainly not the first person to tell me that. Specifically, my friend didn’t understand the massive valuation ($250 million or more) that Twitter won in its recent funding. I told him why I thought it was more than justified: Twitter is, more than anything, a search engine.
I told him what I thought of Twitter as a micro-blogging service: it’s a collection of emotional grunts. But it’s wonderful nonetheless. And enough people are hooked on it that Twitter has reached critical mass. If something big is going on in the world, you can get information about it from Twitter.
Twitter also gathers other information, like people’s experiences with products and services as they interact with them. A couple of months ago, for example, I was stuck in the airport and received extremely poor service from Lufthansa. I twittered my displeasure, which made me feel better – at least I was doing something besides wait in an endless line. I’ve also Twittered complaints about the W Hotel (no Internet, cold room) and Comcast (the usual Internet gripes).
More and more people are starting to use Twitter to talk about brands in real time as they interact with them. And those brands want to know all about it, whether to respond individually (The W Hotel pestered me until I told them to just leave me alone), or simply gather the information to see what they’re doing right and what they’re doing wrong.
People searching for news. Brands searching for feedback. That’s valuable stuff.
Twitter knows it, too. They’re going to build their business model on it. Forget small time payments from users for pro accounts and other features, all they have to do is keep growing the base and gather more and more of those emotional grunts. In aggregate it’s extremely valuable. And as Google has shown, search is vastly monetizable – somewhere around 40% of all online advertising revenue goes to ads on search listings today.
And it’s not just ads that can bring in the money. Brands need tools to make sense of all this data that Twitter doesn’t yet supply. Third parties like Scout Labs are going to be mining this data themselves, I’m sure. But there are lots of other ways Twitter can tax the utility they are bringing to brands. If they manage to turn down the acquisition offers like Facebook did a couple of years ago, there’s no reason Twitter can’t find revenue streams that will support them as a standalone company. Possibly even a public one.