Twitter To Finally Find A Business Model?

Twitter logoIs Twitter close to finally introducing something resembling a business model?

The blogosphere is buzzing today with talk of Twitter adding ads to its posts.

Rumour has it that Twitter will be introducing ads into peoples’ Twitter streams. This would mean that after every 10, or 20, or however many posts, users would see an ad in their Twitter stream. Regular users would have noticed a fair bit of downtime last night. Some people reported seeing ads in their Twitter stream during those outages.

This approach makes sense.

Many Twitter users don’t use the Twitter website itself. Instead, they use third-party applications like Twhirl, Twitterrific, GTalk or Twiku to post their messages. On-site ads would miss these users, but by including ads in the flow of Twitter posts, the company captures a much larger audience.

While the majority of people seem ok with the idea, some people are vehemently opposed, say they’ll quit the site if this happens.

Me? I’m just surprised it took this long. Despite the last round of funding bringing in $5.7m in July 2007, Twitter hasn’t raised a dime in revenue so far.

Twitter needs a business model. With what must be huge server, bandwidth and development costs, it can’t go on providing a free, non-commercial service. Either they introduce a more feature-rich service that people would pay for (and undermine one of Twitter’s biggest attractions – simplicity) or they turn to ads.

The obvious solution, and one that people seem to have figured out, is to include ads but provide an option to turn ads off. This would likely take the form of a (paid) premium service. If it’s affordable, I think hardcore users are likely to take advantage of something like this, while more casual, occasional users would probably deal with the ads.

Do you think this is the right way for Twitter to go?

Update: Oops. This then, again, raises the question: When the hell will they start raising revenue, and how?

Dave Fleet
EVP Digital at Edelman. Husband and dad of two. Cycling nut; bookworm; videogamer; Britnadian. Opinions are mine, not my employer's.