Twitter "Tips" Might Not be for Ads / by Nate Westheimer

twittip1.jpg
UPDATE: I just got another "tip" to "Invite your friends! Send 'invite 212-555-1212'". These tips are just tips.


A few days ago I was rocketed to TechCrunch and CNET fame when Charlie O'Donnell posted a screenshot (here and below) of a message from Caroline McCarthy to me about our "vaporband" TheSAC (Silicon Alley Cats).

But that's not important.

What's important is that Charlie's post seemed to suggest that these "Tips" coming in on our SMS "Tweets" were signs that Twitter would soon be sending contextual ads with out messages and finally (thank G-d) monetizing their "Asynchronous Ambience as a Service" (AAaS/messaging) platform.

I think we may be jumping the gun a little here.

First of all, see these two recent screenshots (to the left and below) of Twits from @andrewparker (yes, of Twitter-funding USV) and @ceonyc (formerly of USV and the cause of the screenshots in the first place). On these, they give real tips. One is a way to respond to Andrew, and the other is a way to get more use out of the service. These don't actually point to contextual ads, they point to Twitter trying to make their platform more "sticky" so that their traffic curve starts to go higher and so they actually begin to break into the mainstream (I still have problems convincing my "real friends" to get anywhere near the service).

What more, the best way of monetizing Twitter is probably not through contextual SMS messages. First of all, the CPMs for these messages will be terrible, and will barely eat into their other CPM rate (the cost of messages themselves). Look at it this way: If Twitter has managed to get a decent rate from the carriers for the SMS' they have to pay for, they're probably dishing out 1.5 cents per message. That's a $15 CPM for all you math whizzes out there, and $15 CPMs are going to hard to grab from advertisers for messages like "caught in the rain" (from Andrew) and "Heading to Boston.. driving carefully in the rain, no vroom" (from Charlie) -- no matter how damn "contextual" they are.

As if that wasn't enough, Nielsen just came out with a massive study (over 25k participants) which placed "trust" for SMS ad lower than other forms of advertising, including online banner ads. Lower than banner ads? Not looking good.

Clearly, Twitter is not going to make contextual ads in "tweets" their business. That wasn't USV's bet and it wouldn't be mine. Twitter will be successful (and I think they will) with their platform. They will one day broker a better relationship with the great walled gardens (the carriers) as they already have been successful breaking into another walled garden (Facebook status messages can now be updated by Twitter), and then and only then they will be a conduit for other web app to communicate with their users across platforms.

In fact, Twitter's involvement in the OAuth project is probably the clearest indication of their direction. By participating in OAuth, it's clear that Twitter is on board with the open social graph movement as well; and, with this openness, it's very easy to see Twitter as the intramobile-to-web mesh that's really needed to drive the next round of mobile innovation.

All in all, I don't know what these "tips" are for, but I'm fairly certain we shouldn't say "Ah, this is what they're up to." I can guarantee that there's a lot less going on with these tips, and a lot more going on elsewhere.

(the text that started it all)