What's next for Twitter?

In the first post in a new series of blogposts (about the future of social media, its impact on business and the potential for innovation), we take a look at Twitter's revenue model.

In just a few short years, social media has changed the way we interact with each other – as consumers, as businesses and as individuals. But there's more to come. We've been covering areas of social interest for a while now here on the UXB blog, but have yet to discuss where we think the potential for innovation lies.

So we've picked a few of the areas where we think there is room for further innovation...

Twitter needs to start generating (more) revenue

Twitter recently announced they had hit 100m users, who send roughly 5bn tweets every month. To date, the company is valued at $8.4bn after recently closing a funding round that generated $800m. Which is all good and well on the one hand, but not so great when you consider the company doesn't yet have a definitive strategy for monetisation.

Luckily, they have a few options. Twitter currently licenses the 'firehose' – which allow tweets to be searchable in real time – to search engines such as Microsoft's Bing. Twitter did have the sameagreement with Google but it recently fell through. But the firehose surely can't generate enough to cover Twitter's current valuation? So the company needs to also be looking at other revenue generating models.

Arguably the next biggest option would be the potential revenue generated from advertising, be that promoted tweets or trending topics etc. When the model was launched last year, many were happy – as long as the advertising was targeted. Which it was; initially promoted or paid-for tweets were only seen in Twitter search from accounts the user followed. Users seem to like promoted content; with a recent survey showing that around 20% of surveyed users have either used a discount from a promoted tweet or discovered a new brand from one.

Promoted content you didn't ask for

But, at the end of last month, Twitter announced it was rolling out promoted tweets from accounts users don't follow. We were a little uncertain at first – how would this work? How would it be targeted? But then Twitter released a bit more information. These promoted tweets would occur in a user's stream if they followed an account that was subject to these ads. Or, according to All Things D;

In discussions with ad buyers, Twitter is describing the concept, which will roll out to a small subset of users by the end of September, as "Promoted Tweets to users like your followers".

This is a process employed on Facebook when you 'like' a brand's page; you're then subject to advertising from brands that Facebook deems to be similar to the one you've just become a fan of.

So, to justify Twitter's currently large valuation (which will only increase), we reckon we'll be seeing a significant increase in advertising on the social network. Will users cope being subjected from adverts from brands they're not following? If users start leaving the network, what other options will Twitter have to generate revenue instead?

Are there other options?

We'd love to see the site say no to an ad-based model and do something a little different.

Why not use the 5bn tweets a month – a veritable treasure chest of content – as a research tool and turn Twitter into something like a crowdsourced information platform? Or aggregate users and the content they generate into interest groups and sell access to them to advertisers/brands?

Change is coming to the twittersphere, change that will mark a new chapter in the company's history. The outcome is far from certain.

Do you think Twitter will change for better or worse once they finish rolling out the promoted content? Have you got any suggestions or points we may have missed in our discussion about Twitter's future? Feel free to leave us a comment below, via email or of course on Twitter.