Brij Singh’s Blog

It’s been a while since I put this little note on my blog. It was 2007 and the title was Why Twitter Matters?

Since then lot has happened. Now in real life Tiger Woods talks in 140 characters. Twitter has now close to 70000 third party applications, round about 100 million accounts (not all are users) and all along tech pundits had been screaming - show me the money!.

Twitter has something for those pundits today. Company is rolling out an advertisement system which relies on 9 unique parameters. Called Promotional Tweets, these 140 character ad units will be driven by resonance algorithm. This resonance score is sort of like 140 character equivalent of relevancy score. Click and link is replaced by click and retweet - plus some more. Promotional tweets are in the flow and it’s part of your attention UI (unlike the AdWord ads which show up mostly on the sidebar). More on Resonance algorithm from NYT:

Twitter will measure what it calls resonance, which takes into account nine factors, including the number of people who saw the post, the number of people who replied to it or passed it on to their followers, and the number of people who clicked on links.

If a post does not reach a certain resonance score, Twitter will no longer show it as a promoted post. That means that the company will not have to pay for it, and users will not see ads they do not find useful, Mr. Costolo said.

My emphasis on ‘number of people who clicked on links’ parameter. It’s too early to predict but designing key monetization algorithm on this parameter means that Twitter needs to control the input link. They need to own URL shortening service. This service will not only be required for the deep analytics but also for speedy real-time computation. Hard to think bit.ly providing rich meta data in the time scale in which Twitter usually thrives.

Tweaking and constant fine tuning around resonance algorithm will drive next set of acquisitions for Twitter. Bit.ly should be a prime candidate.

Also 3rd party apps will be most pleased with this development. Putting money in the stream makes real time stuff look real. Coming from Twitter this removes cheesiness - which is often associated with current generation of in-stream ads. This takes Twitter closer to apps-as-ad-unit model, it’s not very far fetched to think that one day Twitter will start showing small apps as Promoted Tweets. Imagine Starbucks coupon which you can print right from that promoted tweet - without visiting Starbucks website. Twitter is in a great position to leapfrog AdWords model by applying iAd technique here.

PS: Headline is purely for fun. Nothing against Bit.ly. We love their service and use it in our application.

Twitter acquired, one of my favorite Twitter Client, Tweetie. Congrats to Loren and Atebits. Loren did a remarkable job executing on the user experience. So now Twitter has a wonderful iPhone application. In a clear sign that mobile platform is important for them, they also announced Twitter for Blackberry.

Twitter is in the client business now. They are extending their core platform to leading mobile platforms. Not surprised that the developers are up in arms and they are crying foul that Twitter should have fixed their business model problem first instead of competing with them. Twitter has every right to go in this direction. They are still figuring out their business.

To me the interesting point is why now? Why is Twitter making these moves now. It’s not as if users have suddenly discovered new productivity with these clients. There is a big picture emerging around mobile platforms. That picture has elements of location based services (on that is based local advertisement market - which is very very significant. Remember Google/Yelp episode!). Platforms are colliding and this time revenue pipe will be tightly controlled by the entity which ends up having tight control on the platform.

Chris Dixon has a great post on this topic. Evolving platform without having a locked down business model is a risky move. Twitter can compare with Facebook to figure out new ways to make money but anymore comparison will just kill the main value. As he rightly said, Facebook can just sit back and enjoy the drama.

Twitter genius is that it works quietly in the background - in real time. Twitter’s social graph has amazing approachability. They need to figure out ways to make money from that unique experience. Extend that approachability and serendipity to all developers. Give Tweetie back to community as an open source SDK, add firehose access and ask all iPhone developers to build vertical apps with it. Wishful thinking? Maybe.

Giving away complete client side codebase - potentially with unique and standardized user experience like Tweetie - for iPhone, Android(coming soon?), Blackberry, Nokia and Windows7, they can give developers a new architecture for gaming, vertical apps, lbs apps and potentially enterprise apps.

Big question is what’s next for Twitter developers? Wait for the Chirp conference to throw light on Twitter’s long term business model or just stick to business as usual. I think there is one way developers can avoid future heartburn - by going vertical! Agree it’s boring and probably will require domain knowledge but definitely worth it. Pick a category like the way Stocktwits is doing with financial services. Morph your client into a best tool for field journalists, or for automotive sector, or for political event reporting or for social recruitment. Add all the great things which mobile platforms has to offer - LBS, Mapping, Notification and Social Sharing. Obvious advantage in this strategy is that developers will be required to work with their market.

I am sure smart developers are already making their next move. You just have to read Chris’s opening line from his blog post:

I can’t remember the last time the tech world was so interesting.

It’s incredible the amount of change we are seeing in mobile space. All the more amazing when you contrast this with the fact that we are still struggling to recover from Great Recession.

Update: Evolving dynamics around Twitter ecosystem will be under microscope for next couple of weeks. Mark Suster has interesting Salesforce reference:

And Salesforce did this more broadly in all of their key areas. Salesforce was very good at managing the 1-year roadmap so at any point in time we had a pretty good idea about what we would be developing and what we wouldn’t. We also knew what we wanted to build but wouldn’t be able to get to. Often these were things that would make Salesforce more competitive vis-a-vis Oracle and Microsoft. Salesforce was excellent at outlining to the developer community what they considered “core” and what white space they wanted filled. If they gave you the white space you knew you had a good period of time to build a business without being boxed out by Salesforce and you knew that Marc Benioff was likely to highlight you at a conference or with journalists. Importantly, all of this was done privately, as it should be.

Read his full post. It’s full of insights. Two thoughts come to mind

- Imagine how useful Ad.ly kind of services will be if they addressed specific verticals. Why wouldn’t your followers click on car tweet ads if automobile is all you tweet about!
- White space thing is tricky in mobile space as compared to enterprise space (Salesforce area - longer sales cycle = longer dev cycle). At this point nobody has any clue on the pace of white space discovery and white space harvesting as it applies to mobile space. It’s one big TBD.