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We've been talking a lot about Twitter lately. Everybody has. The popular microblogging service continues to grow rapidly in popularity and seems to be making the transition from a first-adopter favorite to a bona fide mainstream property.

But as it does so, the one topic that can't be avoided: Twitter's lack of a business model. Despite the fact that it has raised a lot of money from venture capitalists, at some point the legions of loyal Twitter users will want to see their favorite service fly under its own power. That means that a scalable and sustainable business model must be developed.

As I recently discussed, companies are increasingly looking to bridge the gap between Twitter as a marketing experiment and Twitter as a 'real' marketing platform that drives business. Yet as they do so, Twitter isn't making any money from the trend.

According to the UK's Marketing magazine, Twitter may be changing that soon. According to Marketing's Fiona Ramsay, Twitter co-founder Biz Stone stated:

"We are noticing more companies using Twitter and individuals following them. We can identify ways to make this experience even more valuable and charge for commercial accounts."

This is one of the most obvious business models and Twitter really has two options:

  • It can create new commercial functionality that companies will voluntarily pay for.
  • It can charge for all commercial accounts.

The former approach is problematic because, as I had previously mentioned, there's already so much that companies can do with Twitter at no cost. Twitter would need to create commercial functionality that is really compelling and valuable and alas, Stone didn't spill the beans on how the companies believes it can do this.

In the absence of a really compelling commercial offering that companies will have a strong reason to upgrade to, the latter approach is problematic because it's difficult to charge for something that was previously free. So difficult in fact that I'd suggest that there are relatively few companies online that can successfully pull this off.

Another problem Twitter must deal with is that commercial activity is hard to define. There are lots of sole proprietors and people who run small businesses using the service and their use is sometimes 'commercial' but not always. At the same time, there are also employees of large corporations who aren't tweeting in an official capacity but who have come to be recognized as Twitter representatives for their employers. And what about the increasing number of celebrities who are using Twitter?

Bottom line: what is commercial and what isn't commercial is often hard to define on Twitter.

Obviously, Twitter needs to make money and charging for overt commercial use is an obvious way to do this. But Twitter must be very careful in how it goes about rolling out commercial accounts. It may have a single opportunity and it has to execute flawlessly.

Bob Pearson, Dell's VP of Communities and Conversations, made it clear that Twitter doesn't have the type of leverage and flexibility some might think it has. He told Marketing magazine that "if [Twitter] becomes complicated and costly, our instinct would be to move elsewhere."

Despite Twitter's popularity, I think he's not the only one thinking along these lines. Which means that Twitter has its work cut out for it. In the meantime, companies will continue tweeting while Twitter tries to figure out the exact approach to capitalize. Hurry Twitter, but take your time.

Patricio Robles

Published 10 February, 2009 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2419 more posts from this author

Comments (6)

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Edward Cowell

Edward Cowell, SEO Director at Guava UK

We were discussing this in the Guava office the other day and aren't sure charging for access is a viable business model for Twitter. Personally I would think a content targeted Adwords integration into the feeds would be the simplest system wide revenue generation model and would scale pretty well. As long as they didn't saturate the feeds with ads they can probably do this without annoying the user base to much.

They'd also have the potential for using Googles mobile ads as well. http://adwords.google.com/support/bin/answer.py?answer=29492&topic=8501

over 7 years ago

Ashley Friedlein

Ashley Friedlein, Founder, Econsultancy & President, Centaur Marketing at Econsultancy, Centaur MarketingStaff

I don't understand why they switched off the mobile alerts. Surely they could just have charged for these? A ready-made micropayment model, a sensible and useful application that I think people would pay for, what was wrong with that?

over 7 years ago

Robin Grant

Robin Grant, Global Managing Director at We Are Social

I had quite a long philosophical conversation with the Marketing magazine journalist about this when she was writing the article, which is not entirely summed up with the quote from me she used ended up using (I've got some work to do on the pithy sound bite front, obviously).

The challenge Twitter will face is that there's such a grey line between personal and commercial use.

Aside from the celebrity issue, where they are clearly individuals, but using the service for commercial gain, it's grey elsewhere too.

If I spend a lot of my time on Twitter talking about business related stuff, where does that leave me?

For brands overtly using Twitter, it's not black and white either. Look at Ford's Scott Monty for example (@ScottMonty), who uses his personal account to represent Ford. Even the account we run for Skype (@PeteratSkype) is as an individual not a brand (as is the same for most of Dell's accounts). And of course Zappos famously have hundreds of employees on Twitter.

Let's face it, one of the reasons that Twitter is popular is because it's such an interesting mix of both your personal and your business life - if fact, unlike Facebook or LinkedIn, it lets you be the whole you. Twitter will be risking a lot if they try to change this.

over 7 years ago

Ashley Friedlein

Ashley Friedlein, Founder, Econsultancy & President, Centaur Marketing at Econsultancy, Centaur MarketingStaff

Hi Robin

Yes - interesting point about Twitter being a fusion of business and personal, the 'whole you'. I guess any individual can choose to be as business or personal as he or she wants and his / her followers and followees will choose accordingly. 

Personally, I use LinkedIn for business, Facebook for social stuff, and Twitter mostly for business but with quite a degree of informality. That's just what feels right to me and I also want to set the expectations for others and be clear and consistent in my usage.

over 7 years ago

Henry Elliss

Henry Elliss, Digital Marketing Director at Tamar

I wrote a blog post yesterday on a very similar angle (inspired in no small part by all the speculation going on at the moment, including Robin's) - what is going to happen to Twitter when all the celebrities who are currently flocking to it, get bored?


I can't say I came to a firm conclusion, but I'm pretty sure that if investors have jumped on board by that point, they're going to get a bit of a shock when the fuss dies down again...

over 7 years ago


filter housing

If I spend a lot of my time on Twitter talking about business related stuff, where does that leave me?

about 7 years ago

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