A New Online Revenue Model?

For years, many online companies have generated revenue primarily through advertising. Some rely on a combination of pre-roll and display ads, others often use simple text ads, and still others mix and match advertising formats. Their value to advertisers: eyeballs.

Yet, with the economy in a recession, even online ad spend is expected to take a hit (although not nearly as much as traditional media).

Thus, it's interesting to note that Twitter, a microblogging tool that has caught fire over the past two years and counts nearly 6 million registered users, has shunned the advertising model. 

In a recent interview with the New York Times, Twitter CEO Evan Williams said the company gets calls daily for advertising sponsorships. But it plans to instead figure out a way to generate revenues from the businesses that leverage Twitter to speak to their customers or sell products.

For example:

• Whole Food and Baskin Robbins have used Twitter to announce special coupon offers.
• Jet Blue and Tyepad have reached out to customers via Twitter to address customer service issues. (In fact, I received an email from TypePad shortly after I tweeted that I couldn't add a gravatar to this blog).
• Ford has used Twitter to set the record straight about a news report suggesting Ford managers were eligible for bonuses this year (after petitioning Congress for financial help).

Thus, it will be very interesting to see if companies will pay fees for this type of outreach. Only time will tell. But, with these hard economic times, and intense pressure to keep customers, I'm betting they will.

Technorati Tags: twitter, Ford, Jet Blue, Typepad, Whole Foods

Comments

[konterkariert]

read my article about Summize, Twitter investor Fred Wilson commented "great post"

"Twitter starts Web Data Mining with Summize"
http://konterkariert.tumblr.com/post/42355329/twitter-starts-web-data-mining-with-summize

I also see a big potential in Twitter.

Why did Twitter buy Summize?

“Summize’s mission is to search & discover the topics and attitudes expressed within online conversations.”

Jay Virdy: “At Summize, we assembled a small, quirky, but highly efficient and experienced team to build a powerful platform to extract user opinions from blogs and review sites. Dr. Abdur Chowdhury, our cacographic Chief Scientist, applied machine learning techniques to understand how users express sentiment using common words and polarizing phrases.

Om Malik: “Just as AdSense serendipitously turned Google into a giant cash register, with Summize, Twitter can take the first step towards a business model.”

See also the startup Peer39 - they are also doing Sentiment Analyis and their business model is Advertising - http://www.peer39.com/

"The next revolution in advertising? Peer39 thinks it’s semantics"
http://venturebeat.com/2008/06/27/the-next-revolution-in-advertising-peer39-thinks-its-semantics/

Peer39’s firepower comes from a set of executives and board members with backgrounds in either semantics or advertising. Eytan Elbaz is on their board. He helped invent Google AdSense and sold Applied Semantics to the search giant.

[Andrea Merida]

It will be really interesting to see what they come up with. As long as the business sponsorships are small an unobtrusive, I guess it would be ok. The main thing is that if they get this wrong, then we're all on to the next big thing!