This Week – 01.05.14

After a brief stint on Medium, I’m back to my old WordPress Blog.  I didn’t really see the value yet, but I may be back at some point.

I am also making a few plans to change the format of the content of this blog. While I intend to continue posting original content, I’m going to start posting a weekly summary on Sundays of what I read during the week that I found interesting, and I may post a few upcoming events in New York that I’m looking forward to.  If people like this, I’ll start sending it out in a Newsletter.  Mostly, I intend to cover startups, marketing and marketing tech, management and some tech related industry items.  I’ll also have a New York Tech slant as that’s where I mostly operate.  I’d love thoughts and feedback on these moving forward.

On Twitter’s Average Revenue per user – There was a useful post on Quartz that did some quick math to calculate average quarterly revenue average per monthly user, landing on $0.55 in quarterly revenue per monthly active user on Twitter.  I’ve always found this metric to be a bit confusing as it uses quarterly revenue and monthly-active-users, so this helps break the calculation down to a fairly intuitive level. As a comparison, $FB was closer to $1.20.  Link

More On Acquisition Costs vs. Lifetime Value – Saar Gur from Charles River Ventures created a nice presentation on how to think about acquisition costs versus lifetime value. A lot of startups try to tackle growth before revenue, thinking about it as a sequential equation. While that’s tactically correct, it’s strategically a little lazy.  There are always bigger, publicly traded comps that can help you think about LTV, even if you’re pre-revenue. Link

 The U.S. Student Debt Bubble– Peter Thiel submitted his Graph of the Year for 2013,  choosing to highlight the growing student debt burden in this country juxtaposed against the average starting salary for a student fresh out of school.  This is going to come to a head at some point soon and it’s likely to be an ugly resolution.  It’s also a huge opportunity for disruption and innovation. Link

Kevin Rose’s Tiny New Prototype – Kevin Rose, founder of Digg, created a new blogging platform prototype and just put it out into the world to get feedback. Tiny gives a reader a live, obfuscated view of the author while they’re writing.  While Tiny probably needs some more refinement, I think Kevin’s decision to release a prototype to his audience was a really smart way to work on a product, and contrary to the way a lot of first-time entrepreneurs think about the world (fixed pie, hide your ideas).  I’m also a big believer in the space he’s shooting at, making the web more dynamic, richer and more live.   Link

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Twitter adds photos and videos to search

Twitter just announced that it’s integrating photos and video results in it’s search product. It’s also added a whole bunch of new search tools to help productize it’s vast 140 character, influencer drive, hashtag laden linking ecosystem.

I’m excited to see Twitter make this move forward. Besides the fact that it just feels relevant for the platform, it fits nicely into my thesis around photos and social (as opposed to keywords and search).

This morning we heard Eric Schmidt talk about a gang of four at the D9 conference: Apple, Google, Amazon and Facebook changing the consumer web. I wonder if this makes Twitter part of a gang of five, or at least 4 1/2.

Viva la content:

Twitter, Media and the Osama bin Laden Story

Last night re-confirmed that Twitter is the medium of choice for breaking stories.  As a media channel, Twitter scooped literally everyone….again.  The story of the killing of Osama bin Laden drove massive amounts of sustained traffic, sentiment and insights throughout the night and into Monday.

Measured in Tweets-Per-Second,  the bin Laden story generated the highest sustained tweet rate in the channel’s history, an average of 3,440 tweets-per-second.  This type of activity is still mind-bending to me from a traffic volume standpoint.

Also…well, I’m still shocked when someone like Keith Urbahan, the “original” source,  is able to just tweet it out there and beat everyone to the punch.  Not only that, but the entire incident was live blogged by Sohaib Athar on Twitter.  Nearly all of the meaningful coverage and content touched Twitter first.  Even the mainstream media organizations broke the news on Twitter simultaneously with their regular channels.  I was watching CNN for the broadcast, but the entire time I was reading my Twitter feed and I got better info from it than I did from the CNN commentators.

Of course, this isn’t the first time that Twitter has been the originating source media of a major story.  During the Iran protests, Twitter was so vital that the State Department contacted them and asked them to delay a network upgrade to protect the stream of content coming from Iranian protestors.  This was content that couldn’t be accessed by “mass media”, and peer media networks were the only way that information could escape the country. It was literally a lifeline for people.

Mubarak learned that turning off the Internet should be priority number one in any dictator’s effort to suppress  a story from blowing out of control.  He was right.  He was late, but he was right.  I found it odd and scary that he was able to do this,  and I wasn’t the only one.  It’s scary that someone can take this new thing away.  I’ve come to depend on Twitter as my most important source of news and content and I’m pretty sure that I’m in the norm.

With peer media, there’s no fact-checking.  There is no code of journalism. There’s no filter, no edit and no curation, just a massive amount of tweets.  But, the way peer media works,  the “best” stories have a tendency to float up if they are relevant, timely and started by reputable people. I think that’s where the fairness comes in to this type of a system.

I’m fascinated by what Twitter can be and I feel like we’re better off because of it.  I think decentralizing information distribution by creating peer networks makes the world more honest, and that’s good news for everyone.

Creating Value: Products Vs. Platforms

There’s been a lot of conversation about platforms recently, especially with the recent changes to the Twitter TOS.  Chris Dixon wrote some great thoughts about the rules of platform ownership and makes a great case for maintaining transparency and clear expectations with developers.  I’ve been thinking more about the value chain, and what the best decision is for creating value at a start up.

Everyone wants to build a platform because it creates a network of developers who become dependent on the ecosystem in some way.  It’s like backwards integrating in other types of business; you move one step backward from the end users and start spending time and energy treating consumer-facing application developers as your customers.  If you can build a successful platform, it usually scales better than a product or suite of products.  You can make the case that this is a safer position because you have value-producing partners “in front of you”, all fighting for users and building features from your toolset.  This creates a dependency that is difficult to break.

I think this holds true, but only for companies who first make extremely successful products.  Twitter, Facebook and even Apple are examples of companies that made extremely successful products before rolling out a platform.  I think start up companies need to spend their scarce resources focused on the product side before thinking about a platform.   Entrepreneurs who try to make the jump to a platform before locking down a successful product never quite understand the high intensity needs of the end-user, and will be unlikely to create a platform that developers can build successful products on.

Locking on Strategy: Apple & Twitter

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.

Twitter Ad Networks: Paid-Earned Media

A Friend of mine sent me a link to 140 Proof, an ad network that serves up sponsored ads in Twitter and asked me for my onion on the network. I’m not going to link out to the network, but I would like to talk about my thoughts on this approach as a business model.

I went on the site to find out a bit more information on the company. It was interesting to click on either the “Publishers” or “Advertisers” links on the site, because they both attempted to access and update my Twitter account. I find this unusual behavior for a company who is trying to sell me ad inventory on Twitter, while simultaneously asking to borrow mine without offering any value first. Anyway, here was the email I replied with:

Hi!

Quick response:
* I don’t know anything about this specific agency, but I’ve spoken to others
* I’ve never run a paid media campaign in Twitter
* I find these networks somewhat objectionable and annoying because it’s interference marketing with very little value (I may change my opinion on this, but Twitter is so self-promotional as it is that it seems ridiculous to purchase tweets). With that said, it’s certainly gaining popularity.
* A colleague of mine purchased this type of media for {a client} and reported that it didn’t perform.

If you want to purchase this type of media, make sure it can be performance-based (number of clicks or registrations- not CPM) and understand that you will not be able to target it very well.

That about sums up my opinion of buying earned media. This type of advertising strikes me as being no different from advertorials, and brands wishing to establish relationships and drive beyond a click should be careful when purchasing media like this. Duping someone into clicking on your ad is not advertising.

Social Traffic Referrals

by Christian Brucculeri

I was reading Fred Wilson’s awesome blog the other day and I was inspired but what he said at the #140 conference:

“social media, led by Facebook and Twitter, will surpass Google in driving traffic to many websites sometime in the next year.”

I believe this will happen as well.   I believe we’re searching a little less than we used to.  Granted, when we want specific information (on a health topic, or for shopping) nothing can stop steamroller that is Google (no, not even you, BING), but when I’m just cruising along through my day,  I want to listen to my friends.

I do believe that Twitter is fast becoming a central traffic driver, as that’s essentially all I use the technology for anymore.  While I do enjoy the occasional status update from a friend, I’m more interested in the content people want to drive me to .  Even as I write these words it scares the crap out of me.  Why do I want to be part of someone’s organic search optimization attempts?  I’m not your sponsored search keyword, PPC victim-  so why do I want to click on your links?  Simple: I asked you if I could.

Every time I see a new Bit.ly link I want to see what’s behind it.  I want to see it because you’re my friend, or I find you interesting, or your a publisher I trust.    I know we might have just met, but I’m ready to click on you to see where you’ll take me,  because I believe you thought about it before you put that link up.  I honsetly trust that you stopped before hitting “update”  and thought “Shit, am i being annoying right now?  No, this is cool…let’s roll”.  This is light-years beyond an auction for a keyword, or a brand name buried in a BS blog entitled something like “getyoursiteoptimizized.net.au”.  So please, send me links in your tweets-  I’m interested…