While Twitter has been the source of many articles speculating to it's monetization potential, no known articles exist that analyze the feasibility and potential market size of Twitter given leading ideas. This article examines five possible revenue models that we consider "best bets" for Twitter. From these models and observations, we consider the possibility of whether a full time, dedicated-to-twitter-based agency can exist, and what possible market they would serve.
Introducing cherp.us, an agency that is asking the question on the edge of the edge of the question of whether Twitter can monetize: Is there room in the market for a dedicated Twitter agency?
If you're not familiar with Twitters monetization woes, the subject of a great deal of controversy about social networks, microblogging, and the Web 2.0 investment cycle we're in right now in general, you'll probably enjoy the well written article that my associate Allen Stern wrote on CenterNetworks. The ideas keep coming for how Twitter can make use of it's absolutely explosive growth and extremely fanatic users, and some of them are really interesting (read this, this, this, this, and this, and don't forget FastCompany's questionon the subject). Personally, I think founder Evan Williams has found the best reason for the service to succeed: nobody wants to be a b**ch.
If you want to consider Twitter's possible value, you first have to consider traffic,, which appears to be extraordinary. How extraordinary? Jason Kotte, a favorite blogger of mine, has published two articles on the subject: Twitter's not growing so fast after all (Published: May 08, 2007), and Twitter vs. Blogger redux (Published: May 11, 2007), both of which contain some interesting information (source of quote and materials below).
Biz Stone is attributed to say:
We have been doubling the number of active users about every three weeks for a sustained period of months now which is definitely contributing significantly to more and more updates. Also, active users of Twitter a measured by how many times they update per day (at Blogger it was per month). So activity in general at Twitter is crazy by comparison.
And in the second article, a visualization:
That's some fast growth! But expected considering it's a daily, not monthly service like blogging (twitter activity, as stated by Twitter folks on many occasions, is based on the number of tweets in a day, not a month).
Much speculation has been given to the monetization potential of the social connections that twitter enables, which are frequent, often valuable, and presumably socially tied and therefore of higher relevancy. But the value of these relationships is extremely difficult to estimate. You can look at the value of the social connections created, but this is best left to a Ph.D. thesis; economic valuation of social connections has many factors, and lack of deterministic behavior in social networks I believe to be fallacy, as most attempts to do so are generally defensible only because of heuristic, not empirical, reasoning. A great deal of work is left to do in this area, which requires the development of a map of all of the players in user's social interactions (online and offline substitutes as well), and all of their actions online: the entirety of their social software experience. Add to that the problem that much of the value created by social software is unintentionally created, and you have a difficult mapping problem.
But we can model the valuation of twitter with our own empirical reasoning, on the basis of the models presented by twitters pundits and supporters. Additionally, this will give us insight into whether there is a significant enough market to create viable companies beyond immediate service businesses (which are always based on client demand, which may or may not be attached to revenue, and so therefore possible despite Twitter's ultimate monetization strategies, and many of which are struggling to survive let alone thrive in today's economic climate).
The learning curve on building and launching Social Applications has been steep (just consider the number of use cases!), and as is common in the Valley the monetization conversion has lagged somewhat; that time is done. No longer can virtually any social network afford not to be actively building towards a profitable outcome.
It's going to be really interesting to see who makes more money: twitter, or the agencies that consult it.