Gambling on Twitter: Dollars to cents?

Q: How do you make $1 million in Technology?

A: Start with $100 million

Some have called Twitter narcissistic. Others, blogging for the attention deficit disordered. Many techies have called Twitter nothing more than a feature. Google's Eric Schmidt called it, the greatest social media tool since, well, email [not really, he called it "a poor man's email"...which I guess means all of us who aren't billionaires like Eric, Serge and Larry! Or was he talking about a deficit of substance? hmm]

But I digress. How about Twitter as a gamble? As a firm believer in the wisdom of the marketplace, I'll refer to what some gamblers venture capitalists have decided to call Twitter: a $158 million investment. [here]

What's Twitter really worth? Better yet, what's a follower for your brand's Twitter feed worth?

Following up on last week's calculation of web visitor worth [here] I apply the same misguided logic to the Twitter investment to conclude that a Twitter follower is worth...wait for it...$0.21 per month! (see math below)

At least, that's the revenue Twitter will have to generate off each unique visitor to pay back the VC investment over 3 years.

So What?

To get a 10x return on their investment over three years, the gamblers venturesome will need Twitter's unicorn-like powers to magically tweet $2.31 of additional cash money per user per month. Where do you think that $2.31 per month per visitor is going to come from? Subscription fees? Micropayments per tweet? The Federal Reserve?

Or is there another source? Say, hmm, I don't know, maybe, ADVERTISING!

Of course advertising is always the easy answer. It's probably the one VC's are counting on.

For a user, what kind of advertising am I paying attention to while busily crafting each and every one of the 140-character Twitter treats I'm tweeting to my tweet-toofed followers?

For a marketer, why would I pay to advertise on someone else's feed when I can engage potential customers directly on my own? Maybe that's what Twitter will do...charge companies a fee based on followers. If that's the case, then a marketer might want to look at $2.31 as an upper limit cost for a follower on Twitter.

And in figuring the metric, if I spend $5000 on my Twitter media presence, then I might consider 2164 followers a goal number...that's where the gamblin' smart money seems to have it valued anyway.

Of course, if you can get a follower to do more than follow (say visit an eCommerce site or Retweet for you) then you can figure your return on Twitter in a more nuanced manner. Which is to say, a manner driven by objectives, informed by measurement and, thus, a manner that has less of the appearance of a gamble.

Doing the math (please feel free to challenge this...I was not a math major):

Total VC investment: $158,000,000 [here]

Unique Monthly Visitors (Aug 09, comscore): 28,100,000

One month breakeven return per visitor: $7.68

Monthly breakeven return required per visitor, 1Year: $0.63

Expected breakeven term: 3 years

Expected Return on Investment: 10X

Necessary Revenue Enhancement per visitor per month to meet investment objectives: $2.31 (gotta pay back the original $0.21!)

Teens, Texting + Twitter: age old marketing questions?

The teenage mind is notoriously fickle...in fact, science! [conjure Thomas Dolby song] has suggested that the teen brain pares nearly 60% of its neurons during this formative phase. This biological focussing leads to forgetful moments + ever changing obsessions that could make even a veteran ping pong observer dizzy.

So how come teens don't use Twitter? It would seem to provide a realtime center stage from which to lifestream one's short attention span theatrics. Aren't these two hallmarks of the all-powerful teenage marketing segment's mindset?

According to Neilsen they don't use it as much as their parents. And while parents would be the easy answer, they DO use Facebook, YouTube and other social features-disguised-as-applications that their parents also use.

So what?

Aside from the fact that the graph has some odd segmentation notions (2-24 year olds? do 4 year olds use Twitter? Are 24-year olds really like 12 year olds?) three questions marketers might want to ask themselves come to mind from this story:

1. Why would they use it? Teenagers were early adopters of SMS/Text Messaging. Twitter is more difficult to use as a mobile application and more limited in capabilities. So, what does Twitter enable that they can't already accomplish? (see useful, usable, and desirable here). "What's in it for the user" is an important consideration for marketing to anyone, but especially when the fundamental function has an equivalent already in place.

2. Who knows what they think? Given the notoriously fickle allegiances established during adolescence, isn't the real story that Twitter is being adopted by so many people in pre-Y generations (i.e., the largest population segments)? Even if teenagers tell you what they are thinking, do you ever really get it, er, I mean understand?

3. When does they become you...or me? As in any other story based on age (or gender or race or....) we burden ourselves trying to assign people to pigeonholes. When we use singular dimensions to describe the complexity that is a person, we are left to wonder why such explanations seem unsatisfying when applied to our own behaviors. If the point of social media tools isn't to enable individual expression through social connections, then to what end do we employ them differently than traditional media? Interests, rather than age, are a more reliable predictor of a person's behavior.

I asked my own 16-year-old about Twitter (doesn't use it) and here's what she said:

"It's all status updates, no real interaction. Facebook allows you to do more. It's [Facebook] more convenient and that's what we're already doing. Texting comes with the phone. Some people have it [Twitter], but mostly its to follow celebrities like the Jonas Brothers. It doesn't seem like Twitter is really for us, more for adults."

The Value of Media Coverage: Twitter equivalencies gone wild

TechCrunch, Advertising Age and others are running the headlines about Twitter getting $48 million--or even more--of media coverage in June (according to a report by VMS). Haven't we been here before with the notion of 'media equivalencies'?

Here's how it seems to work: Someone estimates the total impressions generated by the free--er, I mean earned--media coverage of a company in the news. Then, they apply some estimate of the cost per thousand (cpm) impressions that would be charged in paid media. The they add the words 'at least' and, voila', the paid media equivalency.

So What?

There are smart media and PR people who've addressed this general topic in depth (here, here, here). But the Twitter story also raises a couple of very specific questions for anyone interested in measurement, media, and the value of 'buzz':

1. If Twitter got this coverage for free, isn't that the real market value?

2. Is $6.77 cpm the new 'media equivalency unit' ($48million of value divided by 2.7million cpm units)...beyond that, what's the net present value of an impression online or off (see Marketing Themes for 2009 here)

3. Is a Twitter user worth $0.43 per month in media as part of a retention campaign? (number of unique visitors in June divided by $48million 'value').

4. Would acquiring a new Twitter user be worth $16 for each new user in media spend? ($48million in media value divided by the number of new users acquired in June).

5. Do the media companies owe Twitter $48million in 'value' for providing them with something to report (presumably the impressions Twitter stories earned were also paid for by some advertiser)?

Not to dis' the attempt to place a value on media coverage, but I think we can do better than overstating the value of media coverage or creating arbitrary monetary values for earned coverage.

Making money with Twitter: Ending up somewhere else

"If you don't know where you are headed, you'll probably end up somewhere else." -Yogi Berra

Much ado has been made by Twitter-haters about the self-indulgent, ambient-intimacy of posts about latte's, bedtimes and teeth-bushing habits...especially if you aren't Ashton Kuchner or Oprah (who now, like Sting, Bono and some Brazilian soccer stars, requires only one name for recognition).

And while there are obvious insignificancies (?) filling much bandwidth, there is money being generated thru Twitter: Dell, for one, claims to have made more than $3 million from it's Twitter posts (here).

How does that work?

Simply, it works the same way the 1999 Web worked...except you have 140 characters to make it happen:

1. Post information about products, specials, offers and information with a link to online shopping cart.

2. Track referring source for visitor (i.e., where they came from).

3. Analyze completed transaction values against referring sources.

Of course it can be a little more complicated to assess bounce rates, transaction flows, direct + repeat visits, but that's all part of having a plan against objectives...

So What?

Hard goods companies (like Dell or Amazon) have a more direct measure of the money generated from their online presence. But even service enterprises can assign some measure of value to their Twitter feed.

Looking at who has chosen to follow, retweet or otherwise engage a company's twitter feed is not so different than analyzing web metrics associated with blogs, company sites or--dare I say it--direct marketing efforts.

As it turns out, measuring Twitter's value to a company is no different than measuring any other element of a company's marketing communications. Or as Yogi Bear might say: "Boo Boo, if you don't have an objective for your Twitter journey, you'll surely end up somewhere else."

To end up on a few prior posts about metrics and measurement, see here, here, here, or here

To end up the week in Jellystone, check out Yogi Bear: Episode 1