Twitter says no to ads; So how can site survive?

Biz Stone says the micro-blogging site will turn to paid tools, services rather than ads

With Twitter Inc. co-founder Biz Stone ruling out advertising on the social network, the question for the online business world is: What will Twitter do to ensure it can survive the long-term?

Stone, in an interview at Reuter's 2009 Technology Summit on Monday ( see video), said Twitter is steering clear of running advertising on the micro-blogging site but it will one day launch new paid tools and services.

Online pundits and bloggers have been closely eyeballing the increasingly popular Web site and criticizing Twitter's lack of a business plan. Many experts have been doling out dire warnings about the future of the microblogging site unless it comes up with a viable plan for making money sometime very soon.

Stone added that Twitter has hired a full-time product manager to analyze how it should develop paid services.

"It's becoming clear that advertising isn't a panacea in general and Twitter's execs apparently don't feel that the downsides of advertising would be outweighed by what revenue they could bring in," said Gordon Haff, an analyst at Illuminata. "That said, they haven't really said much about what their business model will be. They refer to tools. But client applications are already available for free from a number of companies. And some of the most obvious tools, such as search APIs, are already likewise available for free and it's always difficult to go from free to a charge."

Ultimately, Haff said, it may be wise for Twitter to steer clear of advertising. "But taking advertising off the plate leaves open the question of what will they, exactly, put in its stead," he added.

Last month, Stone told Computerworld that Twitter has plenty of money in its coffers, so there is no rush to develop a business plan. Instead, he said, they want to focus on growing the network, increasing its user base and adding new features to the site.

"It's not tough for us because we have a lot of money in the bank and patient investors [and a] patient board," said Stone during the interview in Twitter's San Francisco offices. "We want to focus on this before profit. If we focus on profit, then we take people away from focusing on features."

But while Stone has said there's no Twitter business plan in the works, he did say that company executives do hope to examine several different money-making ideas later this year. The company doesn't plan to quickly announce a major plan but will first "try stuff out and see what sticks," he added.

Twitter will likely first look at a business plan focused on commercial users, though that doesn't mean that Twitter-using companies like Starbucks or Zappos.com Inc. will have to start paying to use the social network.

Caroline Dangson, an analyst at IDC, said it's a bold move for Twitter to rule out advertising on the site.

"I believe search advertising linked to the new search box on user's profile pages could have been an interesting revenue generator and that Twitter could have found the right balance so that ads would not be intrusive to the experience," she added. "This would have worked well, in my opinion, along with the model of charging for premium services and applications."

Dangson noted that she suspects avid Twitterers - say, the top 5% to 10% -- might pay for additional services and tools, but the majority of Twitterers will simply continue using the free services.

Ezra Gottheil, an analyst with Technology Business Research, noted that Twitter still faces a historical lack of users "stickiness."

Last month, Nielsen Online reported that while people are joining the micro-blogging site in droves, a whole lot of them don't stick around for long. In fact, the online research firm found that some 60% of new Twitter users do not return to the microblogging site the next month.

That, says Gottheil, is going to be a problem long term when it comes to making money.

"It's not clear that Twitter can keep all or most of the eyeballs it is now attracting," he added. "That is Google's problem when addressing the business market. Twitter is wise to choose to build enduring business services. I do think there are potential business applications for Twitter or something like it."

But Gottheil noted that Twitter isn't announcing a plan - just a plan to have a plan. And what that will end up being is now the question.

Join the PC World newsletter!

Error: Please check your email address.

Tags biz stonetwittermicroblogging

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Sharon Gaudin

Computerworld
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

GGG Evaluation Team

Michael Hargreaves

Windows 10 for Business / Dell XPS

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?