BOINK

First off, please accept my apologies for jumping onto the “let’s talk about Twitter” bandwagon.  This is not a blog of pop culture.  I happen to find Twitter not only interesting but revolutionary, and so I have a few bits to chime in on the topic.  One of the hot topics right now seems to be the interest in Twitter’s business model, which brings us to the first truly relevant topic of discussion regarding Twitter.

I just finished listening to Buzz Out Loud podcast 940 (I’m a little behind), and tweaked on to the topic discussed at about 28:00 into the cast.  I apologise in advance to the speaker I’m referring to here, because I can’t identify who is speaking by their voice.  It’s either Tom Merritt, Jason Howell, or Rafe Needleman (I’m assuming it’s Rafe because the article I linked to above is his and it’s on-topic) who at about 28:20 says something interesting regarding Twitter’s business model, particularly “why that’s okay” [that Twitter still doesn't know what their business model is, and is in no hurry to figure it out].  He then continues to elaborate on some great ideas for Twitter to generate revenue.

I just want to say that I agree 100% (so yeah, this entire post is basically an overblown “me too”, but stay with me for a minute…)

There are people in the industry right now who are confused over Google’s interest in Twitter, and I would hazard a guess that the speaker in this podcast is not one of those people.  If you want to understand what’s significant about Twitter from a business model perspective (I’ll get to other perspectives in other posts eventually), you need only look to what is significant about Google.  Google does on the Internet that which Air Miles did to shopping, and Google has moved way beyond analysing just your search queries or where you buy your produce.  They analyse your written conversations with Gmail and Gtalk.  They analyse what you read and bookmark with Google Reader and Bookmarks.  They analyse what you create with Google Docs & Spreadsheets.  They now even convert the spoken word to text and analyse that, in their Google Voice product (formerly Grand Central).  GOOGLE. ANALYSES. EVERYTHING.  And then they use that data to sell advertising directly targeted at the people who might be interested in it.  You.  Because you’ve read it, written about it, bookmarked it, or talked about it.

Behaviour-based targeted advertising is a business model.  And this is where Twitter’s intrinsic value lay.  Don’t forget what Twitter is – it’s an Internet-borne discussion cloud, millions of people deep, and growing and spreading like wildfire.  It’s literally constantly active – Tweets don’t require you to take the time to write out an email, create a document, read something, or make a phone call.  The 140-character limit and multiple-input technology means that you have a global community posting short messages about what they are thinking “right now“ (sorry Veronica).  It’s not full of day-old or even hour-old data – it’s full of immediate real-time thought-data.

Privacy concerns aside, behaviour-targeted advertising is more effective than traditional channel/demographic models, and even offers a better, custom-tuned end-user experience.  Companies that harness this targeting & customisation are going to set themselves apart and excel compared to their competitors because they will deliver an extremely high customer service level at an extremely high hit/cost efficiency ratio.

Look, full page magazine ads and 30-second TV spots cost a pretty penny, and only a small fraction of the audience actually responds to the ad.  The rest of us find the ad annoying (one of two main reasons they invented TIVO, and a main reason the studios have taken so long to adopt digital content distribution strategies).  But even these major studios are starting to come around and see the light of not only digital distribution (the other main reason TIVO was invented – yes, we really do want to watch your programming on our own time), but are also starting to see the value of behaviour-targeted advertising.

Google, Facebook, and others (and more) understand the value of behaviour-targeted advertising.  Twitter, I’m sure, does also.  In fact, I’ll speculate that Twitter knows exactly what it’s got on it’s hands, and isn’t trying too hard to “figure out” its business model – only for how to sell the data it has.  Sales Channel, Advertising Distribution Mechanism, and Revenue Model are the three things Twitter has to figure out in order to become the Behaviour-Targeted Advertising Chosen One it is destined to be.  Google is Twitter’s Qui Gon Jin.  They know exactly what Twitter’s potential is.  So too does the speaker in the podcast.  As for the people in the industry who don’t get Google’s interest in Twitter – I can only recommend you focus less on what Twitter isn’t.

This is what I see Twitter becoming (and getting there faster if acquired by Google):

Now imagine Veronica tweeting that she’s hungry for an In N’ Out burger right now, and she suddenly receives a response tweet that the In N’ Out near her is closed (see her follow-up tweet), and that she should go to the next nearest one instead.  She might receive a tweet back with an address or a map URL or even GPS coordinates that inject into her GPS application.  Or they send her a tweet with a number for delivery.  Or a message that says she can send a reply tweet with her order and they’ll deliver it to her.  Or the Advertising Distribution Mechanism (which Twitter must still figure out, by the way), gives her a handful of alternate options in her vicinity.

This is the potential for what customer service and targeted advertising can become, and in my opinion, takes us closer to that “future” that we all dreamed about when we were younger – with the flying cars and the 5-course meal ready in 3 minutes and the computer chip in your brain remembering things for you and telling you how to get where you were going.  This is, in part, why I find Twitter so interesting and revolutionary.  Time will tell how it all plays out.

As for my next post on Twitter (which might not be my next post), take a minute to read this post by m3mnoch.  It’s tangentially relevant, and he’s always a good read, anyway.