Twitter bows to corporate advertisers, shuns average users: good bye social media, hello corporate advertising

Last summer Twitter made a lot of headline news for its explosive growth without a clear plan for a business model. I blogged about the company twice during that time, once to discuss their lack of revenue model, and another time when the company was being publicly dissed by VCs for… their lack of revenue model.

On Tuesday Twitter announced their long awaited revenue model.

The ad based program called “Promoted Tweets” allows companies to purchase “ads” for the search keywords so that their tweets show up higher in the list. Now businesses will be able to push their Tweets up higher in the feed, blocking out discussions by, say, dissatisfied customers, or during a major public relations fiasco. Toyota would have loved this feature during their recent recall.

In the next phase, Twitter will allow “ads” to randomly show up in the feeds for people it deems interested. So if I’ve Tweeted about my blog on Starbucks’ debranding, Twitter will decide I’m interested in Starbucks’ products and will randomly push the company’s promotional ads down my throat.

Good grief! This effectively wipes out the level playing field all accounts, whether individual or corporate accounts, had in the past. Good bye social networking, hello corporate advertising.

Since Twitter started in 2007, it’s shown phenomenal growth, with over 22 million unique visitors in March 2010, up from just over half a million a year ago. That’s an envious position for a startup, and of course there was a need for a solid revenue plan for the company. But this will change the face of Twitter as we know it, and I’m not sure for the better (I’m willing to be convinced otherwise).

The New York Times quoted Dick Costolo, Twitter’s COO as saying: “The ability of companies to engage with customers around this interest graph is more compelling than trying to wedge yourself into these social interactions.”

Really? “These social interactions” were what Twitter was supposed to be all about.

Before you know it, Twitter will be taken over by ads by corporate big-wigs essentially drowning out the collective voices of average users, and bloggers like me. Hey, maybe that’s what my beef is all about!

I’ve been quiet recently since I’m wrapping up major projects for two clients this month, and also tending to my mother who has been ill (we’re hoping she’ll be fine, thank you). But I’m already working on some interesting blogs coming up soon, so stay tuned and come back!

Is Twitter Ready for Adult Supervision?

Unless you’ve been hiding under a rock over the past week, you’d know that something’s brewing in Iran. News of mass demonstrations against voter fraud there has finally hit mainstream media in US, but it all started on the blogosphere, video sharing sites, and social media sites like the Huffington Post, Youtube, Facebook and Twitter. This created side discussions about increased legitimacy of social media sites, in particular Twitter, which is reportedly widely used by demonstrators in Iran. Whether or not the claims are accurate, Twitter was suddenly thrown into the limelight as a serious player. After all, even the State Department threw in their weight and asked Twitter not to perform their scheduled maintenance so that Iranians could continue to distribute information via the service.

This wave of publicity will force the company and its business model (or lack thereof) under the microscope. Twitter which was launched in 2006 has resisted the advertising revenue model. One of the co-founders, Biz Stone, told the Reuters Global Technology Summit in New York, "There are a few reasons why we're not pursuing advertising. One is it's just not quite as interesting to us.”

Really? Ad revenues are not “interesting?” Are any revenues interesting?

The company has claimed that they will generate revenues from tools not from charging the users and businesses for the service, leaving the actual model that will generate actual revenues as a wild guessing game (who will pay for the tools if it’s not the users or businesses?).

Supporters of the company claim that this is all fine, and that Google didn’t make any money in its first four years either. That would hardly be any consolation to Twitter’s investors who for every Google, can name 30 pet.com’s that didn’t make it without a viable revenue model.

All this comes amidst news of 30% layoffs at myspace, the granddaddy of social networking sites which was acquired by Rupert Murdoch’s business conglomerate back in 2005. The layoffs were due to the fact that – big surprise – revenues at myspace declined. That’s what happens when grownups run a company.

Granted, Twitter’s CEO, Evan Williams, is a successful entrepreneur and sold his most famous company, blogger.com, to Google. Also, Twitter is really just beginning to find itself. It’s possible Williams has plans to prep Twitter for a successful acquisition even though he refused a deal with Facebook. The company has made promises of new features and a viable revenue model by the end of 2009 / early 2010 and his investors seem firmly behind his plans. But if he doesn’t take serious advantage of the Green Wave thrust upon him from Iran, they may have no choice but to look elsewhere for adult supervision.