Twitter’s Monetization Struggle

While companies struggle to figure out how to make money off of Twitter, Twitter is also struggling to figure out how to make money as well. Business Week predicted today that Twitter users might start seeing advertisements on their page, much like what Japanese users currently see. However, there are multiple approaches Twitter could take, including targeted tweets by advertisers.

Under this model, regular users would see sporadic tweets from paid sponsors that relate to their current tweets, much like gmail’s targeted text based ads. The downside to this approach? When tweeple tweet angrily about a product, the reference might cache ads related to the negative comment. (Sentiment targeted advertising should be the next step in all marketing and advertising models).

Businessweek suggests three additional models: users pay, twitter sells ads, twitter sells user information. No matter which route they go, Twitter is guaranteed to see the number of negative tweets about themselves drastically increase.

Twitter faces an interesting problem, as their audience is amongst the tech savvy who typically have strong ties to community and blogging– meaning, their audience has power, reach, and is more inclined to “blog about it.” This audience is amongst the super-lucrative for many advertisers, as the vocal minority is typically the strongest influencers of opinion.

But with all start-ups, the need for monetization always ruffles a few users feathers, as early adopters typically enjoy the streamlined, “free” environment that VC supported products deliver. So how do startups resolve this issue? Early, targeted advertising incorporated on their beta sites? Or, do they just suck it up and let people vote with their feet?

Either way, Twitter’s monetization battle will most likely be a public one, with people waiting to see the giant whale fall flat.