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Have twitter suggest 140 character ads to users, which users can easily tweet, to earn twitter bucks. Optionally, only transmit the ad, to selected followers. The twitter bucks, can be paid out in cash, spent online, or donated to charity. Explicitly, Twitter charges advertisers, more than they pay for tweeted ads. The dynamics & economics of the user selecting which ads they tweet, as well as the frequency of ads, IS THE KEY! Concept: an applet above the “what are you doing?” box presents… If you tweet this… “Check out Howard Lindzon’s new book, I think it’s great http://tinyurl.com/abcdefg” …you will earn X twitter bucks. Where X is a function of the -# of ads you tweet per day -# of tweets you twitter per day -# of followers you have, or the # of selected followers you have -time of day, day of the week -# of times the ad has been tweeted recently -Other criteria defined for custom, large clients The Client to Cash Process Client has message they ts want to publish ee on a certain r tw they e Us ad hen date, to a he t, w t to t certain n n wa y wa audience. e th Client goes to a section on twitter.com, and fills out a form based on the pillars (shown below)
eets User tw ey th the ad if they want, want to
Positive Considerations •Users would monitor the advisement suggestions, indirectly they would be getting advertised at! •Twitter could set up a store, to sell merchandise, at a markedup Twitter buck rate. •Extremely scalable, and timeless, model Other Considerations •Economic considerations would be necessary. The more Twitter offers to pay users per ad, the higher the potential is that a user will tweet it. This creates a demand and supply based market, where optimization would be necessary •Some users would choose not to advertise to their followers •Smart users will balance the number of ads they tweet, with the value they tweet, in order to preserve followers. It should be a self cleansing equilibrium, where people un-follow, those who advertise too much. Negative Considerations •Bot users and spam followers would have to be controlled. No system is perfect, there will be losses. •Nobody can opt out of being advertised to •The name Twitter bucks is goofy. Needs a better name. Five Likely FAQ Time Sensitivity Online Activity •What if people unfollow those who advertise? Then, the marginal benefit of a follower shifts, and the value of a follower does too. This can be solved with economic models. •People will be writing scripts and creating fake followers, what then? Twitter will need to create strict rules, and potentially a reward system for tattle tales.
The client pays for advertising credits, and there account is drained as algorithms match ads to users who…
User tweets the ad they want, because they want to
Pillars of the Advertisement Targeting Content Memory Context Demographics
•What if people don’t want to hand over personal info, in Create algorithms Charge Charge Only advertise to order to tax? Work with clients Only charge make ads advertisers to advertisers based users who have to generate clients, and only Then, the money goes to relevant to the target unique age, on when they been recently content that will tweet to users, in charity, like tipjoy does now. It context of the sex, and would like to active indirectly add such a way so is hypothesized that only a material people geographic advertise. value they only fraction of participating users already view populations Eg. Users who just could support the model. Eg. Movie Launch, ‘@’ replied Eg. Selling a - See the ad once •What if people don’t Eg. Google Eg. How Event planning, somebody, is likely retweet? book, you give - See the ad Television works Buzz creating etc. active. away a quote + periodically Then, up the price of ads. link Who are likely advertisers? By J. N. McLarty, in an effort to save twitter, and just share $0.0833 ideas, I have millions of ‘em! @jmclarty Anybody with cash
Conservative Revenue Assumptions
• • • • • • • • • • Raised $20M, $80M Market Cap. With a PE at 30x, we need $2.6M in net income for 2009, bottom-line, nothing lower. (Just stated, for frame of reference) 10 year timeframe, until growth rate is negative. For all calculations, assume end of twitter, in 10 years, with a sudden death of -100% users. (Conservative enough?) *4.5M current users An estimated *5-10 thousand new accounts are opened per day. So, at 225K per month, and 4.5M current users, 60% per year for next 2 years is probably conservative. Assume a plateau in 2 years, at ~11M users. (Really conservative) *2.2% of users have more than *1100 followers, and these are the only people who ever advertise. (Really conservative here, as BOTH of these numbers would climb faster than the growth rate of twitter) On average, the algorithm, would work out to pay users $0.0005/follower they subject an ad to. So, $0.55 per ad they tweet. Advertisers are willing to pay $0.001/person that sees there ad. (just an assumption). So, twitter earns $0.55 per ad. User earns $0.55 per ad. For a total cost of $1.10 to the client per month. So, a little more than $1 buys a tweet from a user with 1100 followers. The advertising population (2.2% of 4.5M) would tweet 15 ads per month. . (just an assumption). *35% of Twitter users have 10 or fewer followers, so probably won’t advertise, but can be advertised to. *9% of Twitter users follow no one at all, so can’t be advertised to, but might potentially advertise.
25 20 15 10 5 0
20 09 20 11 20 13 20 15 20 17 20 19
Results: 2.2% of users could generate $~9M in revenue for FY 2009
*Data taken from Q4 2008 HubSpot.com Report
Millions ($ or Users)
Conservative User Forecast Revenue generated from only 2.2% of users
1 Year, 5 Year, and 10 Year Revenue?
• 1 Year forecast using a very conservative calculation was ~$9M. Upper bound on that, could be 1.5x to 3x that, if executed quickly. 5 Year forecast, using the same conservative calculation is ~$23M. Again, the actual number could be anywhere from 0.5x to 3x that figure. It would be irresponsible to make a forecast, for this model, or for twitter’s revenue, 10 years out. But, since the contest requires it, steering away from the calculations used for 1 and 5 year (as all assumptions go out the window) I would say, using 2009 dollars, the range could be between $10M and $300M in revenue, $80M is most probable case. There is so much uncertainty in the equations and model, that anybody with revenue targets, even a year out, is just throwing darts. No long term planning, should be decided, until better ad pricing (both bid & ask) is determined.
The Sweet Spot & Some (Fun) Examples of Ads
Ads that get tweeted, noticed. Everybody wins
I like my Investor’s business daily subscription, u might too http://www.tinyurl.com/abcdefg I’m going to the Aspen Conference, June 15th, going to join me? http://www.tinyurl.com/abcdefg Check out a sneak peak to the new Wolverine movie. I can’t wait http://www.tinyurl.com/abcdefg
Clients with Bigger Wallets
“Green is the new Red White & Blue”– Thomas Friedman http://www.amazon.com Follow @WSJ for information from the Wall Street Journal This rich guy I know, @The_Real_Fly needs a date.
Funny, insightful, creative, relevant, useful ads
Algorithms used to suggest ads to users
Oh my GOD, ROFL, check this out http://www.collegehumour.com Are you feeling lucky? http://www.google.com Connect with highschool friends you have nothing in common with. http://www.facebook.com
•Evaluate and compare other ideas using a more realistic forecast, with side by side present value calculations. •Market research to determine what firms would pay to advertise, and what price users would be willing to tweet ads for. •Develop an economic/fiscal model for supply and demand of advertisements, to determine optimized prices. •Define ad targeting metrics to be quantified and available for sale (see pillars on first slide) •Define sales policies and guarantees •Investigate legal necessities & registrations for cash transactions and wealth storing. •Define operating model •Development of all technology; hardware, software to support this concept. •Algorithm development to match ads to users feeds. •Algorithm development to determine which followers should be advertised to. •Identify security, privacy, and ethical risks, contain them accordingly •Identify any remaining gaps and parking lot items.
Bottom line, contact Jeffrey McLarty and his associates at email@example.com to negotiate the completion of part, or all of the aforementioned services. The views expressed in this document are the sole responsibility of Jeffrey McLarty, and are not guaranteed to be accurate
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