Making Money From Twitter

Twitter are gradually rolling out ‘promoted tweets’ to apps now. Cue users being unhappy that a service previously unencumbered by ads is now selling you things you have no interest in. Your Twitter stream’s a personal thing, you don’t want it ruined by the odd advert popping up. That’s perfectly understandable.

I feel slightly differently. I don’t particularly want to see ads in my stream either, but what I do want to see is Twitter having a business model that’s sustainable for the foreseeable future. Luckily, Twitter doesn’t need to make as much money as Facebook, since it has a considerably smaller staff, but on the other hand it has nowhere near the number of users (especially regular users) and many of those users don’t use the web interface as their main means for interacting with the service.

Most of the supposedly ‘free’ services we use right now (especially Google and Facebook) get money out of you by selling your personal information to advertisers and anyone else who asks. As the now-common saying goes, if you’re not paying for a service, you’re the product being sold.

So, Twitter has some options in front of it of ways it can make money1:

  1. It can sell ads
  2. It can sell personal data & search
  3. It can charge users to use its service
  4. It can do some combination of the above

As far as I can tell, Twitter’s going for a combination of 1 and 2, and it’ll be interesting to see how that works out. Users already seem annoyed by the relatively innocuous adverts it’s testing out. They’re unlikely to be happy with this programme developing.

The most annoyed users of all will be shouting vociferously for the third option. “If you’re going to sell ads, why not allow a paid-for version” these people say2, “I love Twitter and I’d be happy to pay to avoid being advertised at”. I’d like to explain why I think Twitter aren’t going to offer this option any time soon, indeed, I’d like to argue why I think they shouldn’t.

If you’re a keen user of Twitter, you might be happy to pay, but the fact is that the vast majority of users won’t. If you run an ad-free service where a tiny minority of users pay, those users pay to support the rest of the customers. To some degree, the paid users are being ripped off. They might be perfectly happy with that, and that’s fine. Indeed, to some extent they’re paying for the other users because it’s those users that make the service better, and that’s part of the deal, but broadly, they’re getting a service that doesn’t cost much money extraordinarily expensively.

Of course, to pay for the free users, you can sell ads against them. This seems ideal, since it means that free users pay their way (through advertising) and paid users get the benefits of the extra feature of a service without advertising, whilst still paying their way. Everyone’s happy, right?

Well, no. The people that aren’t happy are the advertisers. In this model, on the one hand Twitter has to go to advertisers and tell them how great their service is to advertise on. Users will happily click on their ads and turn in to joyous, returning customers. At the same time, Twitter have to go to their users and say “you hate these ads, right? Here’s how you can pay to have them turned off.” If I was an advertiser, there’s no way I’d want to advertise on a network where my advert was used as a downside of the free service, as a stick to beat people into paying for Twitter PRO3. For this very reason, I’m constantly surprised that Spotify gets any advertisers at all4.

So Twitter has to make a starker decision. Do they choose the paid/free model, and thus have to think of what Twitter PRO would consist of - what are the services that people would pay for? How much would they pay for them? Do you sell corporate accounts? How much should they be? These are difficult questions, and it puts Twitter in the place of trying to make back the money that people have invested in the company by creating a two-tier service. The fact that you think you’re happy to pay for it is not all that important. The question is how much would you be willing pay? Finding that price-point is extremely difficult. Do you love Twitter enough to pay $25 per month? $100 a year? Your price might be simple to pin down, but is everyone else’s?

Or, do they chose the route they’ve gone for, and try out some means of advertising. To me, that seems like a simpler option. It removes the need for a two- (or three- or four-) tier Twitter, keeps the majority of users using the service (apart from those so disgusted by advertising that they leave, but, well, we’ll see) and keeps Twitter going for a few more years. I’m happy with that.

Update

Robert Brook has done a rather brilliant audio response to this post entitled ‘plankton’. I’m not sure there’s anything in there I’d disagree with. Also, if you’re not signed up to Robert’s newsletter, then you’re a crazy fool.

Also, Steve Lawson has suggested a Twitter app with no ads. I agree this is the best ad-avoiding option, and it’s a variant I hadn’t considered. Although I think that it still suffers from some of the problems outlined above, I reckon it’d be an easier sell to advertisers.

  1. in fact, Twitter’s had the options in front of it for some time, and it’s made its choice, but these choices are only really coming online slowly now. ↩

  2. Well, you know, they say stuff like that. I’m not quoting anyone in particular, but you can imagine someone saying that. Perhaps they have a jumper on. ↩

  3. You can have ‘Twitter PRO™’ for free. ↩

  4. Right now it gets nowhere near enough to support the free parts of the service, even at the reduced levels the free service now provides. ↩

Martini The sign above the Piazza del Duomo in Florence.

Martini

The sign above the Piazza del Duomo in Florence.

Source: Flickr / minifig

Above is an advert made by Samsung for one of their new phones. The aim, presumably, is to make people buy the new Galaxy S2. I can only assume that it’s not aimed at me, since it seems to be suggesting that I’m a preening idiot for buying an iPhone.

Samsung are, of course, entitled to their opinions. Indeed, maybe a preening idiot is exactly what I am. However, is telling me, or anyone else, a particularly effective way of selling anyone a phone? I’m really not so sure.

I’m A Mac with a soft spot for PC

Let’s point out for starters, however, that this approach is something that Apple themselves used for quite some time with the ‘I’m a PC, I’m a Mac’ ads. Let me just add now that I found that equally insufferable, and found myself thinking repeatedly that it was actually ‘PC’ that I’d far rather be spending my time with that the jumped up twonk that represented ‘Mac’. I don’t like this sort of advertising either way.

The Fanboy Fallacy

Returning to the Samsung ad though - what exactly is that they are trying to achieve? On Twitter @IanVisits suggests:

you can’t persuade an Apple fanboy to change their mind - so why not reach out to the undecided customer?

He also calls Samsung’s attitude ‘clever’, but I think it’s exactly this attitude where I think they’ve made a big mistake. Essentially, they seem to have thrown money at an ad that recreates the ongoing ‘fanboy’ battle played out by dozy geeks online. The gist of it is that some people like Apple too much, and they’re ‘Apple Fanboys’, people so blinded by Apple’s marketing that they buy Apple products entirely uncritically. These fanboys apparently think that they’re brilliant because they do so. However low your opinion of your potential customers might be, the fact is Apple aren’t successful because they tapped this geek market of ‘fanboys’1. Apple are successful because they sell phones to normal, average non-techy people. Many of these normal, average people have bought iPhones in the past, Christ, some of they may even have queued. Surely Samsung would like them as customers, wouldn’t they? Is this likely to achieve that?

As far as I can tell, they appear to have created an ad that exclusively tells already existing customers that they’re better than everyone else, while alienating a huge collection of potential customers. It doesn’t seem like a sensible way of growing a customer base.

The thing is that I think Samsung are doing this because they think that this is what Apple themselves do. Samsung believe that Apple build up their customers to think they’re better than everyone else. In the same way that Samsung have built up a business getting as close to ripping off Apple’s products as intellectual property law will allow, they’re now trying to do the same thing in their advertising. That’s the best explanation I can find for why they’ve been persuaded that this is a good way of spending their money.

Samsung’s Advertising Problem

I can understand Samsung’s problem in advertising though. Let’s take an iPhone ad. Many, if not all, are about showing you the functionality of the phone itself. Many have a simple white background and just show someone working their way through a few features. I find them a bit annoying, but broadly they’re an effective way of showing you what you can do with the phone.

Samsung can’t do this, because their phones are powered by Android. If they made an advert showing you all the functionality a Samsung Galaxy user would have, they’d also be advertising every other Android phone on the market, and theirs is one of the most expensive Android phones available. Customers would look at the ad, decide they like this feature or other, then go into a phone shop and buy a cheaper version of an Android phone, probably made by their competitors.

This isn’t a dig at Samsung’s own phones, per se, as far as I can tell they make some of the best Android products available, but the things that set them apart from their competitors (marginally better specs in the main) aren’t things that many users care about, and when they pop into their local phone shop, most will be talked into buying the Android phone that happens to have the largest mark up in the store.

So I understand why Samsung can’t take the route of showing their phone is better (even if, at least compared to other Android competitors it is) and I can understand why they can’t just show you the phone working and someone enjoying it, but the route they’ve taken instead of trying to make people who own iPhones look like idiots, just looks desperate and rather pathetic.

Samsung Still Don’t Understand

What this shows more than anything else is that Samsung don’t understand why people love their iPhones, and why people will queue for hours to get one, and until they understand that they’re never likely to make a phone that really competes with the iPhone for those users, and honestly, that’s a shame.

  1. Although, admittedly, it was exactly these Fanboys that kept Apple afloat during the Jobs-free years. ↩

Source: twitter.com

Marco Arment on Magazine Advertising

I agree entirely with Marco that when I buy a magazine on my iPad and it’s full of ads, that I feel ripped off. That feeling is not something that an ailing industry should ignore.

Retro Facebook Ad  More here

Retro Facebook Ad 

More here

"You can tell the ideals of a nation by its advertisements."
– Norman Douglas, South Wind