The Evolution of Twitter’s Business Model

For years Twitter has boasted its uniqueness as a non-advertising site. As a pioneer social network with soaring popularity, a proper business model is still unclear for either the founder or the e-commercial specialists. However, they have to find the way of keeping steady income to cope with its innovation and expansion costs.

Advertising? Subscribing? These two words are refused by Twitter. That’s why it has gained overwhelming popularity and most trust by customers who are willing to express more of their thoughts and interest frequently on the site. But sadly, as discussed by emarketing experts and journalists, the new strategy delivered by the founders still couldn’t avoid these two golden principles to make money. What they try to achieve is to make these methods less intrusive and more resilient. That is to say, to apply advertising and subscribing in a hidden and healthy way. 

Advertising

Similar to google adwords, Twitter chooses to drive traffic to their promoted tweets. When you are seeking particular groups with common interest, the recommended accounts will appear on top of the list. The founder claimed that the promoted tweets will only appear at Twitter’s search engine developed by a third-party applicant, which is said to be even more robust and up-to-date than Google and Bing in some aspects.

Also, in order to put users at the first place, Twitter is innovating a measurement tool called ’resonance’, which analyses viewed times and replied frequency of these promoted account, and the number of customers who add it to their favorites. It will choose to continue recommending or stop advertising for the company according to its popularity. The strategy shows signs of democracy and putting users at the heart of the value, while it is still at the risk of putting down the twitter fans who went for its ads-free feature.

Subscription

Twitter keeps the promise of free to its individual users, but turns to cover their investment from business dealers. It has created successful sales platform, official form and in-time service information centre for firms like Dell, which has generated $6.5 million sales in a year on the Twitter presence . Provided with such an ideal, multi-functional and interactive sales environment, few companies could deny to pay certain charge for this brilliant opportunity for business.

Moreover, there are certain premium accounts exclusively for business use. Corporates are willing to pay to verify the authority of their accounts (twitter 101), to establish their formal business platform on twitter, or to claim their unique rights to reach the exact targets in this “real-time social interest graph”[1].

There’s nothing wrong with seeking returns for further development, while on the gradual step forward, the traditional business model such as advertising would inevitably interfere Twitter’s well-established brand image as a least commercial social network.  Also, with more business entering the sites, how to balance between providing demographic information to the corporates and protecting user privacy is another big issue for Twitter. Any improper trying could lead to the devaluated brand equity or less trust among their fans.

 

References: [1] IDG. Twitter gives the lowdown on new business model. 

                        [2] David L. Smith. Twitter’s business Model.

The Teabag Battle

The power of advertising could last for over couples of decades that ‘PG tips’ has rooted into British tea culture just as Coca-cola to carbonates drinks. This case study of branding is quite old but still classical and have profound influences until now.

The idea of using chimps as its “celebrity” came from a copy writer who visited Regent’s Park Zoo and saw a tea party held by the chimpanzees. It received an overwhelming popularity within two years and lifted PG tips to the brand leader. Apart from creativity of the ads,how to keep consistency from the ads, PR campaigns to the brand image turned out to be the major mission of the teabag battle. To keep fashionable and deliver continuous delights to the consumers, the chimps have experienced various events according to the changing of the society and they always spoke the most up-to-date slang.

(The First TV ads of PG Tips)

Well, it’s also a good example on how to measure and distinguish the add-value brought solely by the intangible BRAND. 

1.  Blind test that.

Although consumers claimed that PG tips tasted better, in the blind test of ten labels from big player Typhoon to supermarket own products, the subjects couldn’t tell the difference. A cup of tea is only a cup of tea, maybe they have added too much milk and sugar:p

 2.Demand Elasticity

In the economic analysis chart, the flat curve showed that consumers are less sensitive towards the price change of PG tips.  That is to say, not like the fluctuated demand to other brands, they won’t stop buying or switch to other products even if PG tips has raised its price. PG Tips had of course enjoyed the price premium and also was the price leader in the market.

3. Advertising weight

 Tetly, the other teabag brand was shown to be very vulnerable in loyalty that the demand would easily plunge if they reduce the advertising intensity. In contrast, PG Tips’ brand equity was strong enough to survive a couple of months of no advertising. It kept having a robust performance of about 25% market shares, beating all the rivals with less marketing investment.

4. Qualitative Research in perception of the brand

PG Tips was “loved” by the subjects, and they responded instantly with the slogan in the chimps advertising. Therefore, besides the high brand awareness, consumers had also built a strong and sentiment relationship with the brand, which is admirable for all the advertisers.

In recent years PG tips’  position is challenged by Unilivers’ ‘ignorance’ after acquiring and also by ever-growing substitutes such as coffee and green teas. It is still a mystery that how far the brand could go, while the fact that the chimps has brought PG tips half a century of leader in the UK tea market is already a miracle.

Buzz Advocacy for Movies

Have you ever been influenced by the online buzz?

Recently I read a report of buzz research by WaveMetrix, elaborating how online advocacy impact the sales of the movies. The analysis is based on multi-dimensions, identifying various attributes including film, filmmaker, cast, plot and their different level of influence on box offices. It correlates the movie sales with every variables such as positive/negative; implicit/explicit recommendations and also investigates the sentimental tendencies.

The highlight would be the case studies. For “Inglorious Basterds”, it identifies the director power of Qunteen Tarantino, the other key attributes from Buzz clouds and compared its importance with that of the overall conclusion; whereas in the movie “Up”, the touching plot has won the top attributes in the advocacy.

A very systematic report based on rigorous data. It points out that 37% of film revenues could attributes to online recommendations. Moreover, as the impact of the buzz is immediate and will soon fade away, constant advocacy would be a reasonable strategy for online movie marketing.

Well, in my master dissertation talking about the cross-cultural star effect on audience preference, there was countless of variables that would influence a movies’ box office. The extensive findings by both academic and movie executives have tried every method to compare different drivers and evaluate their importance in a film’s success – star power (actors/directors), genre types, critic reviews, investment, distribution strategies, etc……

Although the research has some valuable discoveries on its own research area, the limited matrix only focusing on the online advocacy as a corner of the overall critic reviews presents a single-equation type of analysis which is far from comprehensiveness. Online Buzz does have its impact, while how strong it is and whether it’s the most important driver remains unclear. For example, I choose to watch ‘Inglorious Basterds only because I’m a fan of Brad Pitt, I decided to see “Up” simply to enjoy the marvelous 3D effect when I saw its trailer before the my 3D film in the cinema.

On the other hand, although it takes audience sentiment as a key variable, there’s no adequate data on how these sentiments have led to the actual viewing decisions. For example, I might have positive feeling about ‘Inglorious Basterds’ but I won’t necessarily go to the cinema to ‘purchase’ the movie. In this sense, the analysis in this report about the sales and the sentiments are rather two separate conclusions without correlation.

References: Online Buzz Research. www.wavemetrix.com