I’ve been trying to identify a trend I’ve seen this week in my RSS feeds, told through the story of Apple changing rules on iPhone application analytics (Venture Beat), the much-discussed HTML5 vs. Adobe battle (I like this Scobleizer read which discusses it) and Twitter developing 3rd party applications for mobile applications and acquiring Tweetie (I downloaded the Twitter application for Blackberry yesterday and it’s excellent). It seems that the biggest innovators in technology are integrating and consolidating their channels.
It’s been interesting watching these companies shift strategies and jockey for space. Apple has always kept a somewhat closed shop. The recent exclusion of Adobe Flash from the iPad was a bold move on Apple’s part, but not entirely surprising considering the company’s history of being a vertically integrated firm that does not like becoming dependent on channel partners.
Watching Twitter and Facebook move around has been the more interesting story. For the past year, Facebook has been redesigning it’s user experience to mimic Twitter’s model. Status updates and tweets are a very similar now, and this is most likely the result of these platforms focusing exclusively on gaining advantage through network effects. Twitter and Facebook have been dependent on content and users first, revenue second. Now that they have both gained massive user bases and rapid adoption growth; the focus is turning towards revenue generation.
Facebook generated over $500 million in 2009 revenue, which came thorough display and performance-based advertising. Let’s assume that Twitter is moving into third party applications in order to serve up mobile ads; is it enough to match the revenue levels that Facebook has generated? The picture gets cloudier when you consider the fact that Facebook made the majority of their ad revenue through 3rd party application advertisiers like Zynga. The platform has already chalked up some revenue by licensing their search results to Bing & Google, and I believe there is more revenue down this path in the form of brands looking for in-depth market research along the lines of what BuzzMetrics offers.
Another route is the sponsored tweet. I’m not a huge fan of this model as a user or as a marketer– I just think earned media should stay earned and buying people’s twitter feeds doesn’t seem like a scalable, sustainable model to me. The fact is that Twitter is an unbelievably useful, intriguing and transformative technology. While I’m not certain what their revenue model is going to ultimately be, I imagine it will be a combination of the revenue models that we’re seeing now (some search, some mobile ads, some sponsored tweets). Regardless what their ultimate revenue solution is, the platform is undeniably here to stay.
UPDATE: Twitter announced it’s model for rolling out sponsored tweets yesterday , and will discuss them in greater detail ad the AdAge Digital Conference, here in New York, next week. I’m looking forward to seeing how these perform. Clearly, opening a channel for more mobile advertising is a big opportunity.