With Twitter co-founders Biz Stone and Evan Williams largely out of the picture, CEO Dick Costolo is looking to expand their current ad platform to start bringing in some more money as they look to raise another round of investor capital. Who and how much are still unanswered questions but in the past Twitter has averaged around $200-$300 million per round so we could probably expect to see a similar amount this time as well. The reason for the new capital is simple, they need to buy time so they can actually try to find a way to legitimize their service. This is a problem that goes back well before March of last year when Biz Stone announced they really weren't sure how to make money and also weren't really worried about it, at all.
What does Costolo have in mind to help try and put this issue to bed? Hit the break to read on and find out.
Since their beginning, Twitter's primary revenue source has always been based on ads. They have tried things like TweetPic, where they can basically profit on your photos any way they like and purchasing TweetDeck, which allowed them to gain back some control of their platform and mitigate their fear that someone else can do what they do better than they can.
The new expansion to their existing ad model is a simple extension of their "Promoted Tweets" to businesses. "Promoted Tweets to Followers" will let businesses send targeted tweets to people that are following them. This already kind of happens when users initiate a search but the directed tweets here will be inserted into the user's timeline. They also realize that caution is required and they have been moving forward slowly in implementing the concept. Twitter released an e-mail saying,
We are taking a deliberate and thoughtful approach with our advertising platform. As that platform evolves, we will continue to focus on delivering value for both marketers and users.
I'm at least glad to see some semblance of common sense in a company that has been thriving on hundreds of millions in investor capital with no real direction. Costolo probably realized that the remaining time they can raise all this capital while remaining a private company is running short. An IPO could buy them time even after private investors start pulling out but that would raise more problems for Twitter as well. Will the "Promoted Tweets to Followers" work; maybe, maybe not. The issue with "Promoted Tweets" is that 70% of them are superficial. People go around friending massive quantities of people so they can charge for their tweets. There is no consideration used in targeting or real value generated there. I think they will have to convince companies this will create value and not annoy users who follow several companies by taking over their timeline.