Article: “Tweeting all the way to the bank”
Source: The Economist
Article by The Economist from their Business section about the monetization and profitability of social networks.
It takes three companies as examples, Twitter, Facebook and Myspace.
The leaked papers of Twitter announces a revenue stream up to $140 million at the end of 2010.
The revenue streams of both Myspace and Facebook are higher, though they as well face the same challenges as Twitter, how to keep your members happy.
Social networks intrinsically thrive and benefit from the amount of members, but a short term rush on cash has diminished the quality of Myspace. Wait too long and the business can collapse.
I’ve referred to this multiple times, in this article a very important challenge is raised.
People are not interested or are less aware of push advertising on social networks in comparison to for example search engine advertising.
Members want to engage and connect with their friends/connections and are not perse in a buying modus or mindset to be engaged in advertising. Social networks do offer advertising, but it also explains why advertisers want to pay hardly a dime for the page views.
This raises the question how social networks can generate revenue. Examples given in the article are:
* Facebook: E-Commerce revenues and enhanced engagement advertising (not referred to in this article).
* Twitter: Offer premium services to corporate users to verify Twitter accounts that secure the genuinity of their tweets or a statistical toolkit that measures the effectivness of tweets.
I want to continue on the revenue generation oppertunities of social networks.
My personal opinion is that the idea of a statistical toolkit must be expanded and the idea of measurement must be taken a couple of steps further.
What would I find important to understand from a social network where the brand partakes?
How does the community behave, who advocates the brand, who are the connectors, who are the enthausiasts, who are the influencers, particular customer behaviour and many other qualitative analyses.
I’m -of course- talking about Social Network Analysis (SNA) applications that social networks could and should offer to their corporate users.
There are third party SNA tools which companies use, but social networks themselves can give extra value for money through their own extensive data resources.
The Internet is a web of many interconnected networks, a vast source of word-of-mouth and customer behaviour.
Furthermore marketers need to transform to a two-way approach, where again, networks play an important role. Advertising and targeting customers are going to change and the basis for understanding thoroughly your target audience lies within the SNA possibilities.
All in all, on a long term, SNA can and will play an important analytical role. (Read also The 3 Fundaments of Online Strategy paragraph Analytics)
What do you think about the role of SNA as a revenue stream?
What other revenue streams can social networks generate?
- Reflection: “Who Finds Twitter More Effective, Advertisers or Consumers?”
- Reflection: “Facebook goes after Twitter with public status updates”
- Reflection: “Forget Twitter; Your Best Marketing Tool Is the Humble Product Review”
- Reflection: “Social media strategies give hope to ad agencies”
- Reflection: “What Is Conversational Currency?”