Everyone has been trying to figure out the future business model for Twitter – BusinessWeek believes that it will be advertising – and soon:
Yet, putting such personal conflicts aside, I predict Twitter will begin selling ads outside Japan, which is no doubt a usability test. American users will see banner ads soon, and don’t be surprised if your message on dining out gets side-saddled with an ad for a local restaurant. And to be fair, Microsoft’s deal valued Facebook at 100 times its then-$150 million in estimated revenues. Similar hyperbole could turn Twitter’s $28 million revenue potential into a $2.8 billion valuation.
But response rates will be low, since other social media, such as Facebook and MySpace, have fared poorly selling stuff to their users. It seems social media users are too busy being social to pay much attention to ads. As marketers see poor results, they will move their ad budgets to other, more responsive ad media. The social media value bubble will be pricked by reality.
The article covers a number of possible revenue streams for the short-messenging service used by millions worldwide… but in the end predicts that they will be acquired by a company like Google or Microsoft as a “hood ornament” to their other services.
