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A $5billion dollars Twitter?

Posted on 31. Aug, 2009 by Antonella Stellacci in Trends

Is Twitter worth $5,000,0000,000? That is what Scoble suggested yesterday in his post Why Twitter is underhyped and is probably worth five to 10 billion dollars.

The arguments that back-up his assertion are essentially four:

-Twitter is primarily a public communication platform that businesses can and will use to their benefit.

-Twitter will hit critical mass sooner and more profoundly than any other “social network”, because it offers an easy way for the public personas to broadcast themselves. (And who is in the entertainment industry, knows that Scoble has a point here).

-Twitter is mobile ready. Facebook, the most likely candidate to take over the public stream sphere, is not and is still playing catch-up.

-Twitter is more data driven than Facebook, its search digs into the tweets of the last few days, whereas data get lost in the Facebook newsfeed.

Why Scoble’s might be right:

-”Twitter is NOT a social network”: it is a platform for PUBLIC broadcasting of your tweets. The $5billion dollars implications:

1. Nothing on Twitter is meant to be “personal” (except for the few ones who chose to protect their stream). Facebook might get there but radical changes are needed to morph it from the secure, personal nest of your friendships into a public domain of your likes and dislikes; and a backlash from its core of heavy users is to be expected as the NTY is already reporting (in a post titled Facebook Exodus).

Twitter is a universally accessible database of users with public likes and dislikes. Tweets are searchable by anyone and show up on Google. You can do all the data-mining you want, segment and target. Geo-location is coming and soon Twitter should add analytics for corporate users, which will make its business value even more obvious.

Bottom line: a brand could look for the users that are most valuable to its business and start creating a relationship with them…No violation of privacy so far. No over-priced targeted display campaign. It’s all there…

2. The eco-system built around the Twitter API faces less challenges than the Facebook one when it comes to sharing users’data. The recent issues with the quiz apps are just one of the many examples.

-Twitter is Mobile ready. Which speaks about the intention of the user and the power of Context. When business will be on Twitter with relevant streams, where will users be more likely to search for a time-critical information? Will it be Facebook? Who will win the mobile advertising budgets, will most likely open the doors to the long-awaited advertising 2.0 era (or 1.0…considering where we still are).

-Twitter is not a social network. Following a brand and/or spreading his hashtags/keywords is not innatural on Twitter as it can be on Facebook. Facebook Fan pages are way different with this respect. Getting users attention and driving them to your page might work through viral dynamics, but users are more wary about reposting corporate stuff in their newsfeed, again because Facebook is about relevant and personal communication, whereas Twitter is a  utility for sharing information.

Why Scoble could be wrong:

Education- As Alex Wilhelm of TechGeist points out, Twitter would need about 40,000 corporate clients who pay a monthly $125 fee  to justify the $5billion valuation. That number is not impossible to reach, even in a short period of time, considering the media hype for Twitter. What could happen though is that those companies, who jump on board with the delusion that social media means viral, might end-up abandoning Twitter for lack of education. Being on Twitter and getting followers is not just about a sweepstakes or a random tweet. It’s not a coincidence that Zappos has been one of the few successful so far. How many Tony Hsieh have you met? Olivier Blanchard presentation, Basics of Social Media ROI, has a few insights on the common misunderstandings surrounding social media. And they’re here to stay…

User Experience. The real challenge that Twitter faces is to find a way to add value for advertisers without spoiling the user experience.  Is Google an advertising platform or search? In reality the first, for the mass it’s the second.

Spam. Protecting users from spammers and shady affiliate networks should be a priority for Twitter. No business model will be proven if they don’t find ways to avoid users from an avalanche of spammy followers. Nova Spivack memento still holds true.

Competition. Facebook or any other third-party? As Scoble suggests, Facebook has the potential to get there and has a larger user base to leverage on. Other thrid parties are working on it as well, from Co-Tweet to PeopleBrowsr …the list is truly growing at the speed of light. It will only be a matter of who is faster and better.

Tags: Trends