Twitter has multiple business models to choose from
I get asked over and over: “How do you think Twitter will monetize? What’s their business model?” While it’s clear they’re already experimenting with ‘house’ ads, ads that promote features of their service, I’m not sure that’s going to be the right direction for them. We already know that click through rates on social networks are low, why? because people are there to communicate with each other –not search for information like Google or on a media site. It’s possible they could turn on ads in the search tool, as people are seeking information. Yet all of these tactics have been done on other social sites, I think that Twitter has a unique opportunity to tap into the lucrative CRM space.
Manually tracking a large brand within Twitter isn’t scalable
It’s important to first realize that managing a large brand on Twitter isn’t scalable, with hundreds –maybe thousands of tweets about a marketplace a day, individuals will have a very difficult time managing, Brian Solis has some relevant stats on growth. The next challenge? determining who these people are, and if they are a potential customer is important, who are these people, are they important, where do they live? Lastly, responding in near real time is going to be key –as some users may ask their peers for product recommendations during point of sale, right in the store.
Twitter has two of the three key features of a CRM system
First, let’s break down why Twitter is going to be a Social CRM, let’s start by analyzing what entails Customer Relationship Management:
1) Customers: Yes, they got that. More than that, they have prospects, which to some marketers is far more valuable. As prospects start to talk about products, they’re indicating engagement, and could be further down the buying process. Both are valuable, however the challenge is mapping which Twitter ID is which customer –many don’t use their real names.
2) Relationships: Got that too. Now I realize that the intended definitions of CRM meant the relationships between customers and employees of a brand, but now you can see how people in Twitter are connecting to each other, and those that follow a brand, their indicating affinity towards them. The interesting thing is they don’t just offer affinity towards your brand, but also competitors, which helps in segmenting your market, and can help with poaching.
3) Management: Here lies the opportunity Twitter has no management tools to support this, as a result, their data is being whisked away in the API and being aggregated by two types of companies. The first company? Traditional CRM companies are importing the data into their own systems, in fact we know bits and pieces of this are happening for Facebook. Secondly, brand monitoring companies like Radian6, are importing twitter data into their listening platforms, and then offering simple workflow and task management.
CRM Incumbents Moving In
Today, SalesForce announces it’s integration with Twitter, or at least, their aggregation of their data in what’s called the ‘Twitter Firehose’ in order to suck in the discussions and allow it to be managed within the SalesForce system. As a result, brands will start to monitor –then manage– the discussions that happen online. I was briefed by Clara Shih (related book), the creator of FaceForce (now called Faceconnector) (Facebook + SalesForce integration) last week, and while I think they’ve taken one step forward –there’s more to be done in confirming IDs, influence, and intent to buy. Update: Here’s the Service Cloud site, which emphasizes customer service and support.
Twitter’s Opportunity –should they decide to take it
Although they have not directly said it, I think Twitter can go further than this, they could be their own CRM system, by perhaps offering their own analytics system to brands, that will help them to track and manage the conversations within the 140 sphere. This has tremendous opportunities for Twitter should they create their own brand management system that they can resell to the world’s companies to monitor, alert, track, prioritize, triage, assign, followup, and report on the interactions with brands. The myriad of authority based tools will need to be incorporated, as some users have a larger network and are therefore more influential than others. On the other hand, they just might leave the firehose open for the incumbent CRM companies to take advantage of –and miss this opportunity, hell, Scoble is already expecting brands to contact him when he has a major life event. Either way, with a recent funding amount of $35mm, they’ve enough run rate to first manage growth, then prepare for monetization.
There are a few layers when it comes to how Social CRM can evolve, I’ll save that for a future post. On a related note, this is one of the key findings from our many interviews for the upcoming report: The Future of the Social Web.
Surprisingly, some of the most important resources from a VC isn’t the financial funding.
When I meet with startups I find it helpful to find out who their investor is, secondly, it’s important to watch how VCs are funding, as it impacts what type of technologies we’ll see in the next few months. I don’t know as much as I want to about the VC world, so when I have questions I turn to Jennifer Jones, just this weekend we were engaged in the topic of the overall value that VCs bring. No, not just the money aspect, but the other intangible benefits, as VCs provide several intangible services to their portfolio companies, as I understand it, they include:
VCs Provide Startups With A Competitive Edge by Offering Additional Services:
Often, VCs sit on the Board of Directors of their portfolio companies and provide guidance, direction, and access to other decision makers. This not only protects the VC to keep an eye on the company, but gives the entrepreneurs a chance to bounce ideas off senior and seasoned investors.
Being Part of The Family
Access is important. When I meet with startups, it’s important to know who invested in them, as it indicates their network. If you watch carefully (real carefully) you can see that startups that share the same investor use each others products, exchange executives, and are talking to each other. They often have offsites
Some VC firms have education teams and marketing teams that provide a broad range of services to the portfolio companies who don’t have the resources to hire full time marketing staff. In fact, I’ll be doing a workshop with Giovanni Rodriguez in the near future for a VC group. Recently I held a dinner discussion with Allegis capital and Scale Venture Partners, to meet their portfolio and discuss market trends.
Perhaps the most under utilized is the benefit of being part of the brand of a well known firm. There are certain firms that are known for investing in certain verticals, or have a track record of success that lights my eyes up. Companies often tout their investors in briefings, especially if they are a top tier firm.
Parties… eerr um Networking
Ok, that’s my polite way of saying great parties, well networking too. During the height of the economy, some VC firms flew the executives of their portfolio companies out to a one week retreat in Hawaii. Also, some of the best parties in all of Silicon Valley are at August capital –social media networking nirvana.
Recruiting and Fundraising
I added this bullet after the fact, after seeing how David Hornick has added to the conversation it’s too important to pass up. VCs offer additional services like recruiting, which I’d be so bold to say is often executive placement of the right folks. Secondly, they help with fundraising, which I would assume would be for additional rounds of investment, I would expect that this would often mean a solid reference from one investor to the next.
Entrepreneurs should weigh all benefits
Of course, with the top tier VC firms, there are certainly considerations, getting backed by a very successful VC firm may mean they have more influence over the terms, may drive the direction of your company, and ultimately, may have more equity of the company. I encourage you to think about the other services, network, and events that your VC will offer you, find out by observing or talking to companies in their portfolio.
VCs offer more than just funding
VC should continue to provide thought leadership in their space, discussing in public why they are raising money, where they anticipate market growth, and how they plan to invest. This not only attracts new investors for their fund, but gives branding cover for their portfolio, and the folks in the industry, like me, visibility on the next trends. What they do beyond the investment makes a different –I can see it.
I’m respecting your limited time by publishing this weekly digest on the Social Networking space, which I cover as an industry analyst. By creating this digest (I started this over a year ago) it really helps me to stay on top of the space I cover.
I’ve created a new category called Digest (view archives). Start with the Web Strategy Summary, then quickly scan the succinct and categorized headlines, read text for my take, and click link to dive in for more.
Web Strategy Summary
There were several announcements at SXSW, primarily highlighting new apps, and connectivity between the iPhone and Facebook. Simple ads appear on Twitter, and security pros are ever concerned about social networks as they connect to each other.
Advertising: ‘House’ Ads on Twitter spotted
This screenshot shows some “house” ads (promoting the features and fuctions) on Twitter’s right hand column, this could be a potential placement for other types of ads.
Best Practices: Streamlining Community
Social media scientists will appreciate the heavy recommendations in this article, which suggests the following: User anonymity should be forced, Barriers to participation should be as low as possible, Moderation should not focus on users or on comments in isolation, but on the relational quality of comments. Read more in attacked from within
Redesign: Facebook’s redesign leaves some wanting
Facebook’s redesign last week has indicated how the web is moving real time, however with every change comes drawbacks, RWW suggests that the profile pages are limited, access with twitter, and confusion between pages and profiles. Ugh, now I need to take a closer look to make sure I can tell the difference.
OpenStack: Twitter now oAuth compliant Twitter has now announced compliance with oAuth, which will allow third party developers to access the data–without exposing your personal info and login info. Ya’ know all those twitter clients that require you to fully login with your user name and password? Now it could authenticate, keeping your password just to yourself.
Data: Twitter growth, small, but quickly growing Comscore data shows that “In February, 4 million people in the U.S. visited the site, up from 2.6 million the month before, according to the latest data from comScore. That represents a 55 percent month-over-month growth rate, compared to 33 percent growth in each of the two months prior.”
Submit: I’m listening. If you’re a social network, or widget company, I want to know of your news, send me an email, or leave a comment below. Help me stay up to date but first, read how to score your announcements.
Hungry For Social Networking Stats? Then you should see my collection of Social Networks Stats for 2008 and 2009. Bookmark them, then share it with others as I continue to update it.
There’s been a series of announcements this last two weeks, many which are happening here at SXSW, yet it’s important to look at what these changes mean as a collective, here’s my take:
While working on my report the future of the social web, I was white boarding out ideas with Josh Bernoff on some of the changes that will be happening as social technologies become more important. It’s clear that as mobile devices become more prevalent, and social communities grow online that they’ll take main stage in our personal and business lives.
As I was explaining to him how I think they could be all pieced together, I said “your friends will be with you as you travel”, being an expert wordsmith he suggested it’s more akin to having an “entourage in your pocket”. The thought is that everyone will feel just a bit more secure and confident knowing they can instantly access their community.
One of the key changes is the access that we’ll have anytime and anywhere to our trusted network of friends, family, and colleagues –and not just asynchronously, but in real time. Here at SXSW, Facebook announced that it would tie to iPhone extending mobile application to be present wherever users are at. This impacts both retrieval of information from your network –and publishing to your network in real time.
What to expect when the mobile and social web combine:
Access to your trusted network anywhere
We know from data, that users trust peers more than any other group, and now, consumers have access to their most trusted network wherever they go. Take for example my colleague Nate Elliott who recently moved to Vancouver, using Tweetdeck he just asked what the best restaurants are in his area. Imagine consulting your peers (or perhaps their peers) in near real time for what they think of big ticket items like TVs or cars, or even more daily items like checking to see which one of your friends rated a restaurant in Yelp, or a product in Amazon before you buy it in the physical store.
Access to your trusted network anytime
As we’ve seen from Twitter, and now the recent Facebook redesign, the web appears to be moving more real time. We’re starting to see life streams and activity streams as more common design elements in mainstream websites even like Yahoo YOS, and Microsoft Live. We may even see uses of asking your peer network directly in Twitter in real time maybe tools like Tweetdeck that now connect Twitter and Facebook, granting the ability to shout out “has anyone had experience with this product? Love to hear your thoughts before I buy”
Growth of location specific applications
When you start to think of what this means for the next generation of apps, we will start to see location specific applications. Perhaps you’ve heard of mobile based social networks like Loopt, Whrrl, and Brightkite, yet these applications could provide further context to users as they maneuver the terrain. An example could be of an individual being a fan of a product in Facebook, like Starbucks, an iPhone can already track where you are on Google Maps, but now can find the nearest cafe to you. What’s the change? Now it can recommend product specials for you as you get closer, enticing users with their favorite beverages. Mix in social, and it may suggest for you to invite your nearby friends, which would result in a discount for both of you or other reward.
We’ve yet to fully explore what the real time, and location specific social web has to bring, the opportunities are nearly limitless. Love to hear from you what potential applications could be built.