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Why twitter is relevant and how it can make money

There’s been some speculation on how twitter can make money and while there are detractors who still don’t understand why people would twitter, it’s becoming clear that twitter happens to have captured a unique segment of the population in a way that practically no other site has.

Twitter’s very nature attracts chatterboxes, connectors, social sneezers. Twitter has become a social network of influentials precisely because these people understand the value of being heard, and conversely the value of being up to date with the latest trends.

It’s just a natural extension of blogging. The same people who derided blogs for being a waste of time (after all, who wants to hear about your whiny thoughts) are once again entirely missing the value of this tool. Everything I wrote about why you should be blogging applies to twitter, except with a higher sense of immediacy.

If your company is not twittering about product releases, you’re missing out. If you’re not using twitter to engage your userbase directly in conversation, you’re missing out. If you’re not using twitter to complain about bad customer service, you’re missing out. And if you’re captured in an egyptian jail and you don’t have twitter you’re missing out.

By now it should be clear, twitter is not just a place to tell people about what you ate for breakfast, but a very significant tool for businesses and individuals looking to build social capital and engage in the most direct form of marketing currently available on the web.

So coming back to the revenue issue…clearly twitter is a very valuable service for companies like Southwest, Zappos, and Woot. They are making money from twittering by attracting new business. So why shouldn’t twitter share a piece of the pie? Facebook’s dismal CPM rates and the research findings that suggest that most ad clickers are middle aged women imply that ad revenue on twitter will likely be largely irrelevant. But I bet Southwest, Zappos, and Woot would be more than happy to pay for a premium service. Twitter should come to these companies with a log of outbound clicks and show them all the business they’re driving. I bet that’s worth something. Hmm….

Twitter is also interesting because you can find people discussing issues of interest and follow them as a result. Also fun to meet new people through “friends of friends”. That’s hard to do with email or even blogs, which don’t immediately reveal who is following whom.

Excellent point, Steve. On twitter it’s often possible to talk to people who would otherwise be inaccessible to you (e.g. the CEO of Zappos). Of course as message volume increases on twitter it becomes increasingly difficult to be ‘heard’ over the noise of those around you. There are already some tools appearing for filtering and tracking conversations on twitter, but I wonder how people who follow thousands of others are going to deal with large message volume. The upside is with only 140 chars per message it’s easier to wade through a list of twitters than an email inbox…