The Entrepreneurs at Twitter: Building a Brand, a Social Tool or a Tech Powerhouse?

MID-TERM ASSIGNMENT A Paper Presented in Partial Fulfillment of the Requirements of the Robert Kennedy College MBA Course Nr. 57582 - Entrepreneurship Prof. Francois Therin October 27, 2010


index of contents. edited and proof-read this paper. or words. ideas. This assignment has not been submitted for any other course at Robert Kennedy College or any other institution. I further acknowledge that this written work has been prepared by myself specifically for this course. whether quoteds directly or paraphrased. th Signed the student. I have revised. October 27 2010 Certification of authorship I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledged and fully disclosed in this assignment/paper/examination. Signed the student.Declaration of originality of work I affirm that the attached work is entirely my own. October 27th 2010 Word count: 1952 without title pages. I have also cited any sources (footnotes or endnotes) from which I used data. except where the words or ideas of other writers are specifically acknowledged according to accepted citation conventions. executive summary and bibliography 2 . theories.

any road will get you there.“If you don’t know where you’re going.” The Cheshire Cat in “Alice’s Adventures in Wonderland” by Lewis Carroll 3 .

...................................5 2 Twitter: Bright Idea or Real Business Opportunity? ..................................................................................................................................................................................................................................................6 3 Twitter’s Marketing Approach ................................................Index of contents Executive Summary ..............................................................................................................................................................................................................9 4 ...5 1 Overview................................................................................8 5 Bibliography .........7 4 Twitter’s Way to Profits......................................................................

Only then will interactions lead to click and purchase actions. affiliations and proceedings in the daily information-gathering and decision-making on Twitter. Twitter’s founders Evan Williams. to filter and tag those users according to their online behavior. endless possibilities arise how Twitter can capitalize on its popularity considering the 24 million registered Twitter users by the end of 2009 making up a technologically savvy and broadly interested user base allowing for special targeting with opt-in options and high interactivity levels as well as high levels of attention and reach. What started as the bright idea of its founders has slowly but surely developed to an unexploited business opportunity Twitter as a very trendy social tool has to monetize on. it should also have a value and charge for this value was more or less ignored or remained in the background. It needs to better understand its users and their interests. Twitter has to expand its marketing and branding efforts to increase its publicity by means of embracing community. subscription and interest sensitive suggestions and recommendations of who to follow as well as B2B-sales approaches like selling API and basic services to large companies using Twitter for the internal coordination and update of employees as well as deepening its cooperation with the big players like Google. supported by extensive media coverage. Ways to do that might comprise exclusive offers accounts. Twitter needs a clear strategy for its future profit generation. 5 . The notion that when a service is of value. sponsored trends. Considering Twitter’s declining user base in the last quarter of 2009. Christopher Isaac “Biz” Stone and Jack Dorsey relied essentially on their investors’ patience and goodwill while they were building the best product. technology and company possible…for free. Twitter’s marketing approach to date has been that of evangelism or word-of-mouth marketing with viral components.Executive Summary Proclaimed as the hottest company since Google and Facebook. The path to profitability for Twitter passes through delivering a more intelligent and better aligned service to its users. Microsoft and Facebook by granting their spiders and search engines free access to its users’ data base so that the their advertising partners can get a comprehensive placement and offering on all of these companies’ platforms. Twitter has to discover and implement unobtrusive and user-relevant ways to “sell” its audience to advertisers and interest groups. promoted accounts of different companies based on the interests and search requests of its users. Recognizing the importance of Twitter’s service to its users. this obviously wasn’t enough. Twitter introduced a revolutionary micro-blogging service in 2006 that allowed users to spread and share short messages of 140 characters (“tweets”) with friends and strangers subscribing to follow their communication flow (as so called “followers”) in order to find out what is happening right now from any point of the globe. interactive and digital marketing. Raising a total of US$ 155 million from investors without generating a single cent in profit or return on investment.

whereas Twitter allows free communication. Twitter is an easy-to-use micro blogging service with components of instant messaging and social presence notification based on short bursts of information (“tweets” of 140 characters).). “Twittr Beta” was launched by the spring of 2006. based on the idea of the SMS aspect and inspired by brands like Flickr and the fact that American SMS short codes were five characters long (Mark. Twitter differs from Facebook in the fact that Facebook users can communicate with each other only by mutual consent. India. transmitted to lists of recipients (“followers”) (Mark. given that his describes Twitter as an information company (Mark. 2010: 4). 2010). Another essential characteristic and differentiation of Twitter is that it is an open source platform encouraging the development of third-party applications by others (Mark. presidential campaign and played an important role as communication tool with the outside world during the 2008 attack in Mumbai. 2010). Twitter set out to revolutionize communication as we know it by allowing its users to share news with friends and strangers as well as to find out what is happening right now. the company’s future path remains to be decided. 2010). 2 Twitter: Bright Idea or Real Business Opportunity? Twitter started out in early 2006 as engineer Jack Dorsey’s bright idea of a service enabling users carrying cell phones to update small groups of people simultaneously on their current situation or status by entering a short numerical code before beginning the message. Defined as a “short burst of inconsequential information” and “chirps from birds”. Considering that Twitter still hasn’t focused on a clearly defined business model and is looking at different types of revenue models ranging from e-commerce to B2B (business-to-business) services. Stone and Dorsey finally committed to “Twitter”. The renaming to “Twitter” happened later on as its developers tried to come up with the perfect imagery for “buzzing your friend’s pocket” (ibid. Williams. Founded in 2006 by a small group of programmers led by Evan Williams. Twitter rapidly increased its users’ base reaching 29 million in mid-2009 but dropping to 24 million by the end of 2009. Twitter also increased its usage during Senator Barack Obama’s U. signing up and viewing of public tweets to anyone willing to open an account and log in to its platform. as well as during the Iranian presidential election’s protests in 2009.1 billion in net earnings and reaching one billion users by the end of 2013. 6 . S. Christopher Isaac “Biz” Stone and Jack Dorsey. Relying mainly on its first users as well as on some Hollywood stars like Ashton Kutcher and Drew Carey to become “personal evangelists” for the service as well as on extensive media coverage and word-of-mouth promotion.1 Overview Labeled by the media as the hottest technology since Google and Facebook. Twitter co-founder Christopher Stone identifies a greater affinity between Google and Twitter than between Facebook and Twitter. Another essential difference is that Twitter is mainly based on text while Facebook allows for the exchange of photos and videos. Twitter will eventually have to commit to its very ambitious financial aims of generating US$ 1. advertising and retailing recommended products. Given that Twitter raised a total of US$155 million of funding and was valued at US$ 1 billion by the end of September 2009 without generating any considerable earnings or return on investment. Important questions arise on the way. Twitter defines itself as the most varied communication network basically representing a subscription to an index of the messages of the people one is following.

discussion and product oriented group formation is just ideal. 2010: 6). what offerings they are interested in and what prices they are willing to pay (cf. Given that social media communities are the chief platforms for community marketing and considering Twitter’s concern about non-intrusive ways of generating revenue. Twitter’s founders define themselves as entrepreneurs coming up with business or entrepreneurial ideas (cf. 2010. the 2008 attacks in Mumbai. Interactive marketing is customer-initiated and customer-controlled (cf. ibid.As so often with original ideas. technologically savvy and broadly interested user base allowing for special targeting. Marketers and their representatives must wait for customers’ participation and exchange willingness. and the protests during the Iranian presidential election in 2009 further increased Twitter’s popularity as essential tool for public communication and interaction that not only spread the news but made the news. This type of referral marketing was complemented by clear viral marketing elements. Twitter is looking at a wide range of business opportunities for which it imperatively needs a sustainable strategy. This approach is in total compliance with Twitter’s user orientation considering the company’s devotion to the users’ experience and their commitment to building the best product. interactive and digital marketing. relying heavily on users promoting its service. 2006: 612).000 per day “as participants talked about the service and the bloggers in attendance wrote about it” (Mark. assuming that “where you have audiences. Twitter’s founders were mainly concerned with developing the bright idea to a valuable service supporting the millions of users depending on it. Mark. acting independently and freely spreading recommendations of the service to others. However. he simultaneously revealed to already be thinking of the next big thing (revolutionizing e-mail) which substantiates suspicions that his commitment to Twitter’s profitability isn’t (and probably never was) his main concern. Given that investors were easily persuaded of the service’s worth. Even if Williams stated to journalists to wanting to go all the way with Twitter and to have as large an impact with this service as possible. technology and company possible (cf. The notion that when a service is of value. ensuring them that they had “patient investors” (Mark. S. its valuable approach of being an opt-in service with high interactivity and therefore high levels of attention and reach and last but not least a very trendy social tool. 5).). the US$ 155 million injection gave Twitter’s founders some peace of mind. Finally digital marketing representing all forms 7 . presidential campaign of 2008. This is why Twitter is struggling to set a clear focus on revenues. it should also have a value and charge for this value was more or less ignored or remained in the background. Mark. Twitter’s future marketing approach should increasingly focus on community. Taking into account Twitter’s offering of integration of other applications or web services via an application programming interface (API). 3 Twitter’s Marketing Approach Twitter’s marketing approach to date has been that of evangelism or word-of-mouth marketing. Given that they were working to make ends meet while pursuing their real passion on the side – to find the next big thing – their success came as a byproduct of their pursuit of originality. This clearly exemplifies the extent to which Twitter’s situation in 2010 reflects the past record of its founders. Kotler and Keller. 2010: 2). 2010: 8) and enough funds to continue building the company. demonstrated by waves of seemingly spontaneous outburst of tweets followed by new users subscriptions like the South by Southwest festival in Austin in 2007 where Twitter had a big break when festival participants were able to see their tweets flash across television screens in real time which lead to the triplication of tweets to 60. India. almost as if the notion of monetizing on the service is degrading its “noble” origins. community marketing with its strategy of engaging the audience in interaction. The U. Twitter clearly is an outstanding business opportunity considering its enormous. It’s the customers who define the rules of engagement that is they specify what information they need and when. Extensive media coverage completed Twitter’s rise to popularity. it is understandable that investors will expect Twitter to come up with a sustainable business model and a presentation of the ways and plans to achieve the highly set targets. you will make money” (Siminoff in Mark (2010: 7)). they need to recognize the importance of monetizing on business opportunities. not as a fully intended and envisioned result of planned moves toward wealth. As such.

Organizations can then be charged based on new followers the suggestions have resulted in as well as the clicks and page views the new followers have executed. of course.for example .VIP event invitations. Twitter can start charging larger companies which are using its API and basic services for the internal coordination and update of employees. companies or topics to follow each time a user subscribes to following another on the platform. Twitter can deepen its cooperation with the big players Google. It might interest you that @FashionVictim follows @OscardelaRenta. This more traditional marketing approach is a necessary complement to Twitter’s coming of age as a brand and contributes to spreading its message to a wider audience of potential users. There is still enormous opportunity to fully exploit and to monetize on trends happening on Twitter. The advertisement on Twitter will stay discreet and will be visibly labeled as such. Microsoft and Facebook can get a comprehensive placement and offering on all of these companies’ platforms. deserving special treatment and cool deals and discounts. Twitter will be charging its advertising partners based on the click-through-rate. It needs to deepen the understanding of its users’ needs and interests by means of setting up its site to mirror the steps the users go through in the daily information-gathering and decision-making process and thus identifying Twitter communities which can be sponsored and “sold” to advertisers. The whole idea would be based on the “You saw it first” approach giving Twitter users a sense of being special. 8 .” This way Twitter stays unobtrusive given that it only recommends relevant accounts and topics based on the users’ current interests and searches while at the same time it can charge the companies it generates more followers and traffic for. too. One example: It can display a text in the right hand column of the users’ interface showing “Trending now: GAP jeans”.” Or “You follow @FashionVictim.of digital advertising including television. the faster and more successfully it will become an avant-garde player on the social media front.”. Users can subscribe to the accounts and receive the best deals and sales discounts on particular products and services as well as . There are countless possibilities like for example:  In cooperation with select partners and advertisers Twitter can create exclusive offers accounts with special time-bound deals and promotions created solely for the Twitter community. Microsoft and Facebook by granting their spiders and search engines free access to its users’ data base so that the advertising partners of Google. Similar to Amazon’s approach of suggesting to someone who has just purchased a product on their e-marketplace what else he might also be interested in by means of saying: “Clients who purchased this also liked or purchased that.      Concluding we might once again highlight the fact that Twitter needs a clear strategy for its future profit generation. mobile and other forms of digital media has to be furthered. it can “sell” them to advertisers by means of serving them with relevant suggestions of “who to follow”. in order for Twitter to increase its brand’s public awareness and popularity. Twitter can introduce sponsored trends by means of bringing trend topics to its users’ attention. radio. Twitter can initiate promoted accounts of different companies based on the interests and search requests of its users. The sooner Twitter defines and solidifies its business model before someone else does. It might interest you that @Miss_T follows @AbercrombieNY. 4 Twitter’s Way to Profits Twitter can definitively earn profits and capitalize on its popularity. the generated page views and the closed deals. Twitter can start suggesting and recommending interesting people. Once Twitter starts filtering its users’ interests and “tags” them according to the consumer groups they represent. Internet. Twitter could reach out to its users in the following way: “You follow @Miss_T.

P. (2006) Marketing Management.5 Bibliography Kotler. 12th ed. a Social Tool or a Tech Powerhouse? The University of Western Ontario: Richard Ivey School of Business. K. Inc. Mark. 9 . & Keller. (2010) The Entrepreneurs at Twitter: Building a Brand. New Jersey: Pearson Education. K.

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