Twitter and its revenue model(s): past, present, future

I have always been fascinated by Twitter. While some people think writing something that is only 140 characters long by its nature has to be superficial, I am a great believer of the power of brevity and - in days of information overload - indeed also the need for brevity.

And as integrating a link (leading to more content) in your tweet is easily done, the 140 characters rule can be easily broken, as done by many tweets which simply act as signposts to a much longer piece of text.

The Twitter business model, however, is a different story and for some time has puzzled me as well as others, as Twitter kept very silent about it for a long time and also seemed to make the point that, unlike Facebook, advertising revenue would not be the main revenue.

This has the world waiting, some in doubt, some in expectation (including myself) what the business model might eventually be - a question that has gone unanswered for a long time, especially if you consider the value attached to the company and its growth pattern.

Now, as the recent interview wih Adam Bain from below shows, the answer is here: The revenue model, without mentioning numbers, is predominantly advertisement-based and indeed the advertising part of the business has experienced a phenonemal and rapid growth in the last 18 months resulting in there now being a solid base of 2,400 advertisers on Twitter.



It was a very interesting interview, but the answer still comes to me as a little bit of a disappointment: I guess I had expected something slightly more innovative and novel, something that counterbalances the competitive disadvantage that Twitter in my view has in the advertising arena, when compared to, for example Google and Facebook: less customer insight data that their competitors, the latter of course a key pre-requisite of focused customer targetting and marketing success.

On the other hand, I think, there is an awful lot to be said for the clean and simple 140 format and the requirement for a succinct advertising message to be developed by advertisers - a challenge and opportunity for advertisers at the same time ! A space worth watching !

Imagine ... a life without Social Media

Lots of great data and research is available on numbers of users for various social media, often broken down by social media type as well as user demographics, including country, age, gender.

I love these statistics and analysing how different demographic groups show different levels of enthusiam for social media. Alex Trimpe's video below provides a wonderful short overview of how pervasive social media, i.e. in this case Facebook, have become in our lives.


The World Is Obsessed With Facebook from Alex Trimpe on Vimeo.

However, the real question lurking behind all this is, of course, WHY do people use and/or not use social media ?? And here, I am in particular referring to private as opposed to business use as the latter can usually be relatively easily explained in terms of marketing ROI.

In Germany, I know a number of people that are reluctant users or indeed non-users. In another conversation the other day, the person I asked about their vehement refusal to jon Facebook answered my question (typical Irish!) with another question, i.e. why should he use social media when life was possible without them and indeed had been fine without them ?

The latter statement, of course can be said about a lot of things, ranging from the introduction of toilets (okay, I admit, maybe a somewhat krass example - who you really want to go back to the time before their existence ?) to more recent and maybe less life-critical inventions, such as the radio, the television, the phone, the mobile phone.

So, is taking a stance against social media the reaction of a luddite or that of a pragmatist ?

My own view, would be it is a bit of both. There is no harm initially resisting and in particular questioning new technological phenonema that have the potential to dramatically impact and change daily life. However, I think you also need to be open to change and evaluate the pros and cons brought about by a technology. The latter is a characteristic I often miss in those people that show a strong resistance, often combined with a lack of experience with the new technology.

Would I be able to live without social media ? Yes, I would and I would be so delighted at the bit of extra time I freed up in my busy schedule: Finally time to catch up with friends again, some local friends who I can meet for a coffee or indeed finally time to phone the more remote friends I have in other countries ... So, no social media, less sitting at the PC. Lots of changes to HOW I do things ... but would it dramatically change WHAT I do ? Probably not...

So, what is your view ? Can you live without social media ? And most importantly, what are your reasons for using or indeed not using social media ?

Christmas Online

I just finished a brief blog post for the charity I work for, Give&Buy, a classified ads website, where 100% of all moneys raised go to charity: With Christmas nearing, we are encouraging people to buy some of their presents at our Website (and hence in aid of charity) and also at the same time - and equally important - encouraging people to donate goods of services to Give&Buy, so we can offer a great range of interesting goods to choose from.

In this context, I looked at Christmas shopping trends for this year, where the three big macro-trends seem to very much reflect the economic and technological times we live in:
1. Less spend on Christmas gifts this year
2. More buying online
3. A trends towards re-gifting and buying more meaningful gifts

The online trend of course is most interesting for the discussion here. The trend was already strong on 2010, where a study showed that 59% of Germans and 61% of British people (compared to an EU average of 51%) said they would do a considerable part of their Christmas shopping online.

This year again, the trend is expected to continue, with, for example in Germany, one in three Germans planning to do their shopping online, quoting convenience (delivery to the home, shopping anytime) and cost amongst the main reasons for their decision.

What are your plans for Christmas shopping this year ? Have you started yet ? And which channel are you planning to use ?

The world in the eyes of Twitter statistics

Being a data-loving nosy parker, one of my biggest Internet sins is to get caught up in looking at statistics on various things - some good, some dubious - including of course statistics showing patterns of Internet use.

There are many great sites for this, one such being Social Bakers. Here I was looking at some of the Twitter stats today.

I had really been looking for usage numbers by country having found some - rather dubious - ones on another website yesterday. But, instead, the Twitter statistics here take a slightly different angle and instead of user numbers per country focus more on giving details on accounts, brands, and media with high numbers of Twitter followers.

And looking at this makes your mind boggle. Worth a look in particular is the section on top twitter accountstwitter accounts andtop twitter brands:

The three top Twitter accounts are Lady Gaga, followed by Justin Bieber, followed by Barrack Obama. Hmm, so this is what makes the world tick. What an interesting reflection of popular topics and figures of public interest today! I love looking at data like this and what they tell us about the current Zeitgeist. Another (now somewhat out-of-date, yet still) interesting treasure in terms of looking at the world reflected in users online behaviour is of course Bill Tancer's book Click: What millions of people are doing online and why it matters. Certainly an enjoyable and recommended read.


But let's not divert and instead take a look at the top brands listed here for Twitter! Number one here is Charity Water, that is the brand of a non-profit organization for bringing clean and safe drinking water to the people of the developing nations.

Of course, water is a critical resource impacting the life and quality of life of milions of people and there is no doubt that this brand deserves a top position. But who would have thought a charity brand can make it to the top ?! It goes to show the power of the Internet as an enabler of non-mainstream views, businesses, and topics, great !



And where, I am wondering, in this list of Twitter top brands is the usual top brand trio of Coca-Cola, IBM, and Microsoft ?? Not sure, but neither of them appears in the top 21 shown on the first page and I am not checking further right now.

Some thoughts on Twitter

I have not been twittering for a few days ... and, more importantly, I did not log into Tweetdeck, while working, for a few days.

So, what is the impact ?

- Did a life without Tweetdeck increase my level of productivity ? YES!
- Did I miss anything substantial ? NO! (or as my granny used to say: "what you do know, you can't miss")

So, the conclusion might be, social media are a distraction and should be avoided.

But I am not sure! I have very mixed feelings about social media:

On the one hand, yes, my little experiment showed there is a distraction factor. And the value derived from tweets varies, as tweets vary greatly in quality and - even with careful selection of tweeters to follow - relevance.

However, on the other hand, I think social media are absolutely wonderful when - as most things in life - used with a bit of thought and a certain level of moderation. And I especially love the brevity and no-nonsense approach of Twitter. This to me in a world full of constantly changing data and information is of great appeal.

And just look at some of the numbers of the Twitter success story ! These are from March 2011 and presumably have risen since. Aren't they just amazing ?!

Any Free Lunch at Facebook ?

Last week I looked at Facebook penetration Ireland vs. Germany and observed that Facebook penetration in Germany is considerably lower than in Ireland.

This immediately raises the question for the reasons for this difference in usage, and if you follow the related news in both countries, you will notice a considerably difference in terms of the public discussion on the topic of Facebook: In Germany (and that really also includes the other German-speaking nations of Europe, i.e. Austria and Switzerland) there is a lively and often rather critical debate with regard to Facebook’s approach to users’ data, in particular the LIKE button and face recognition.

Personally, I have for quite some time been on the non-German and more relaxed side of the debate considering the German discussion on data privacy somewhat exaggerated and paranoid – after all, as they say, there is no such thing as a free lunch. And if users want to use the Facebook platform for free, giving up certain rights to their data is just the price you pay...

However, as I started to dig deeper into the issue, I have somewhat changed my mind on the topic and can indeed see and agree with certain aspects of the German discussion: And after all, it’s not as if anyone wants to ban Facebook – no, it’s just about being more accountable, more transparent and in some cases adding some functionality that gives people a choice. Surely, this should not be a major issue ...

So it’s good to see then today in the Wall Street Journal that the US Government is making some headway in making Facebook more accountable and transparent.

I’d love to hear what’s your view on the topic ? Which side on the debate are you on, and why ?

Germans and Irish on Facebook

Germans and Facebook, it’s such a strange story, a true love/hate relationship.

A recent report  from Comscore, commissioned by Bitkom, showed that Germans spend 16.2% of their online time on Facebook, i.e. it is the website they spend most time one. Followed by Google with 12.3 % of online time.  That percentage does not sound that high. However, bear in mind that only one year ago, Germans only spend 4.1% of their online time on Facebook. So, there was a big jump in one year! Also, bear in mind that in Germany there are other popular, German-specific social networks targetting a similar followership as Facebook does, for example the networks from VZ as well as wer-kennt-wen  social network.  But Facebook wins out. It is understandable then that Germany, with its 21,634,380 Facebook users ranks as the no. 10 country in terms of Facebook users, right after France and just before Italy.

So, how does Facebook use in Germany compare to Facebook use in Ireland ? Badly ! Yes, you heard right, badly. While Ireland’s position in the Facebook country total membership ranks with just over 2 million members is tiny and puts it in rank 59, the data on Facebook penetration in Ireland tell a very different story, with Facebook in Ireland having approximate double the online penetration than Germany, both in terms of overall penetration as well as in terms of internet user penetration. 

As the  Figure below (data source: Social Bakers) shows: While Germany has a higher internet penetration than Ireland, a sizeable Facebook followership and a steady Facebook growth rate, it lags behind Ireland in penetration, both overall penetration and penetration amongst the Internet population: 

An (e-readiness) tale of two countries

When I was working for IBM, managing the Global Centre for Economic Development Research within the IBM Institute for Business Value, one of my favourite annually recurring projects the joint production of the e-Readiness Rankings report with the Economist Intelligence Unit. In this annual study we examined seventy countries in terms of their level of e-readiness, i.e. their ability to leverage information and communications technology to the benefit of their economy. Based on both quantitative and qualitative data looking at several aspects of e-readiness, including technical as well as legal, socio-cultural, business and policy and usage criteria, the countries were then ranked in terms of their e-readiness.

In the most recent editions of this annual report, Ireland and Germany tended to end up in similar position, for example, in 2010, Ireland was ranked 17 and Germany was ranked 18, both countries effectively swapping their respective 2009 ranks.

My own reaction Ireland’s and Germany’s e-readiness rank has always been a mix of disappointment and surprise:

Firstly, disappointment that these two countries did not do better: With Germany being a large, mature and technologically advanced economy and Ireland being a small, agile country with a young well educated population and an openness and commitment to information technology; it seemed both countries could and should have done better.

Secondly, surprise that two economies and countries so different tended to end up in similar ranks.

Below you can see the top 21 countries for e-readiness in 2010. No 2011 e-readiness report has been published yet ... I wonder what the rankings would have looked like this year ...

To or not to , that's the question !

I came across an interesting article from the New York Times this morning (Emoticons move to the business world) in which the spread of emoticons, those lovely smiley or non-smiley icons used in many an SMS or email, was discussed, especially their more recent spread to the business world.

Personally, even though my use of them is restricted to the most basic ones, I very much like emoticons and do not see them, as some do, as a sign of degeneration of language, a sign of lazyness or something else negative.

On the contrary, I think there are two reasons why emoticons are important: First, the Internet means that we use written language to a greater extent than before: Many a conversation that would have previously been oral has now moved to a written format, whether it is an SMS, an email, an instant message, or any other similar, Internet-enabled form of communication. Written communication has many advantages over oral communication, in particular its formality and its relative lack of ambiguity. But formality and lack of ambiguity are not always what is required in communication, especially not in early stages of relationship-building (be it in a private or business context), when a too formal and too straight approach can be off-putting and there typically is a need for a certain amount of informality and  ambiguity. Second, the Internet and the general trend to globalisation means we are now more often than not communicating across cultures and across languages. This means that the language we use in our written communication needs to be unambiguous and clear, as speakers of other languages or members of other cultures may not appreciate, or worse, misinterpret, any ambiguity introduced.

This is where, in my view, emoticons, come in very handy: They allow us walk this fine line between formality and informality, directness and ambiguity by using the power of written language for creating a communication that is as unambiguous and as formal as required in a business context. Yet, at the same time, in addition to the use of language, a well deliberated use of emoticons allows us to introduce some informality and lightheartedness into written communication. And, added benefits for all those who communicate across languages and cultures, due to the symbolic nature of emoticons, interpretation is clear and universal - bar some differences between use of emoticons in the Asian world, which are very interesting indeed and  need to be paid attention to.

So, what is your view ?  Are emoticons a good thing or should they be abandoned ?

Pride or Prejustice ?

Okay, I admit there is the odd day when I secretly long for those days: The days before computers, or more precisely before the Internet, were omnipresent and ubiquitous. Life seemed to be so much slower, so much more sheltered and safe. The former is probably true, the latter two more likely the result of the bliss of ignorance. And yes, ignorance can have its benefits sometimes ... :) !

But faced with the choice between Internet and No Internet, my choice is clearly in favour of its existence and I would find it rather hard to imagine life without. I'd rather give the TV a miss. Not a question!

This is why it fascinates me that some people opt out of the Internet.

In developed countries, with Internet penetration typically somewhere between 65% and 90%, depending the country (Internet penetration in the EU), people not using the Internet tend to be a minority. And there are some interesting correlations too regarding age, educational background, gender, income.

One part of the answer, of course, is the digital divide, i.e. the largely involuntary exclusion from the benefits of computing and the Internet as a result of financial, education and other circumstances. The other and more puzzling part of the answer relates to the people that voluntarily and quite consciously opt out.

So, when the recently published Oxford Internet Survey came out, I immediately skipped to the section on non-users and the latest analysis of their reasons for non-use.

The rather surprising answer - and interesting here to see the difference between ex-users and non-users - can be seen in the figure below .... and brings me back to the title of this blog and the question: ah, how exactly do I know I don't like something if I don't know it ???

Can slowness be a competitive advantage ?

I always find it interesting to see how attitudes towards the Internet are in many ways so different in Germany than in Ireland. Of course, it is always risky to draw conclusions based on non-scientific data, such as data from simply speaking to people and watching the overall flow of news, but I believe there are always some conclusions that can be made. And one is, that the Internet is viewed in a much more critical way in Germany than in, for example, Ireland. 

This includes issues such as data privacy, the impact of Internet on, for example, children and youths, the role of social media, especially Facebook (and its much disputed ‘like button’), Internet addiction etc. I will come back to some of these topics at a later stage, but what struck me today was a news article, which reported that Microsoft’s Streetside encountered far less resistance in Germany than Google’s Street View, with ca. 240,000 people in Germany asking Google to exclude their house from view compared to only ca. 90,000 requesting the same from Microsoft.

This raises several questions in my mind as to what might be the cause of this change in objections:

• Are times changing and are people becoming more used to what could and – in Germany – very much tends to be perceived as invasion of privacy
• Why did Microsoft choose such as ‘difficult’ market as one of the first European markets (after UK) to introduce Streetside ? 
• Was there less concern about Streetside in Germany, simply because of the relative unimportance of Microsoft’s search engine Bing in the German market, versus the prevalence of the Google search engine ? 
•  Was Microsoft’s proactive approach (see: http://www.microsoft.com/maps/streetside.aspx) towards dealing with data privacy concerns better than the rather reactive approach to issues  that Google adopted ? 
• Is it sometimes better not to be the first in bringing out of new product ?

The last question, in particular, is an interesting one to explore: New technology, especially technology that is aimed at the wide masses and impacts everyday life can have a longer adoption cycle. This gives the competition, especially the close follower in the market, a great opportunity to let the trailblazer do all the hard work in terms of educating and converting the market, while the competitor can use the time to fine-tune and optimize both the product and the approach to market. As Microsoft clearly did in this case, entering the market later, but very proactively in terms of the data privacy issues and also entering the market with added functionality, such as integration of Streetside with Flickr geo-tagged photos, which, I think, is a real treat indeed.

But there is of course a risk to such a delayed approach and we see it play out in the similar way in the fight for market share between Facebook and Google+ at the moment: With most people only using one application of the same type, can the late-comer convert and win back the early adopters and win critical mass?What do you think ?

Past performance is not indicative of future results

There is some talk these days, if the recent high evaluations of Internet companies like Facebook  are realistic or indeed if this could turn out to be a bubble similar to the Dotcom Boom and Bust at the beginning of this century. I remember the time in early 2000 well, as I worked in a corporate business development capacity then, specially focused on supporting these burgeoning internet start-ups by selling services and consulting to them – mostly design and development, some business consulting. I also remember that many of these start-ups just had an ‘e-business’ idea,  but often the management team had little real technical background or understanding and indeed sometimes possibly even less business background, judging by some of their business plans, which did not go much beyond the idea itself. And didn’t have to, as there was money and excitement in abundance! There were exceptions of course, some very notable and very interesting exceptions, but this is beside the point here. 

The point I am leading up to is the statistics on Internet users published by Internet World Stats (http://www.internetworldstats.com/ and Nua Ltd.  These go back as far as 1995 and show the massive increase in Internet users that has taken place over that period and as depicted in the Figure below.

And once again, I divert, as I remember the early 1990s equally well and the role that the Internet played then:  I was in my final year for my BSc (Hons) in IT in London and surely as an IT student should have been one of these early users. But I was not: the Internet did not show up in those IT lectures, indeed, got even less of a mention than object-oriented programming and C++, another yet to be discovered area at the time, and it was a German journalist friend of mine, visiting London, who raised my awareness when I had to accompany her to the first (?) Internet Cafe in London, a place she had heard about and wanted to write about. Well, as I said, different times...

But let’s come back to the chart with the history of Internet users: The data underlying the chart show, that in December 2000, there were 361 M Internet users worldwide, corresponding to a penetration rate of 5.8%.  Fast-forward eleven years to June 2011 and the numbers have dramatically changed: There are now 2,110 M Internet Users worldwide and penetration, worldwide and including many developing countries, has reached 30.4 %.

As is to be expected, penetration rates between regions and countries vary considerably. But even Africa, the region with the lowest penetration rate today, due an Internet growth of a staggering  2527.4 % (!) in this period, in 2011 has an Internet penetration rate of 11.4%, which is virtually double of what the global penetration rate was in 2000.

Of course, this does not protect from over-evaluation of Internet companies, just as over-evaluation of anything, be it bank shares or the housing market – as we have had to learn in the last few years – does happen in all sectors and probably will happen again. However, as far as Internet companies go, it is worth taking note that we do live in a different world today than we did in 2000: The Internet has become part of the daily diet for most of us, especially in developed countries. Not all of what is on offer on the Internet is needed for the daily diet; some parts are fads, others quirky snacks, others probably downright unhealthy, and a great many only relevant for subsets of Internet users.

 

Which of the more recent trends and fads will be added to our staple diet is yet to be seen and I think there are interesting times ahead. As they say (and finally say loudly) in the financial world: “Past performance is not indicative of future results”.