Update: Twitter And Why The BtB Business Model Seems To Be Promising

Yesterday Mashable reported, that NYPEXX estimates that Twitter might generate a revenue of US-$ 283 million in 2013 (how exactly, they’re not sure either)” and puts the value of the company at US-$ 1.13 billion.  It’s definitely strange to guess the future revenue of a company that hasn’t even  revealed its business model. According to the report, facebook is expected to generate US-$ 710 million in revenue next year. That would represent more than a 40 percent increase  from this year. So NYPPEX is quite bullish for Social Media in 2010. Maybe this is  kind of a “paving the road to the Social Media Hype on Wall Street” approach in the run-up to facebook’s expected IPO.

With revenue level at around US-$ 283 million Twitter should be highly profitable in 2013: Assuming a lean cost structure we think break-even should be around US-$ 60 – 80 million. The company has outsourced the greater part of software development to a growing Twittersphere. With a small number of employees and in view of the fact that the Hype around Twitter is doing most of the marketing the company should run at relatively low costs compared to facebook, google et al.  Interestingly the founders of Twitter have a totally different level of revenue  expectation for 2013: 1 billion subscribers and one dollar per subscriber in revenue p.a. [i.e. US-$ 1 billion in revenue]. Let’s put aside this ambitious expectation. To see that analysts see Twitter running at a profitable basis is very good news. Given the fact that this year’s revenue is said to be mere US-$1.3 million!

                                                                                                                                                                                                                                                   

Let’s go ahead with good news about Twitter. Reading DELL’s blog post today I learned that the DELL people managed to generate a Twitter-related revenue of around US-$ 6.5 million so far. And DELL seems to be happy with this development. Sure: US-$ 1.5 million are negligible compared to the total revenue of DELL of around US-$ 60 billion [in fact that’s just 0,01%]. But that’s how e-Commerce like amazon started more than a decade ago.

 

Is this good economic news compatible with my yesterday’s assumption that the HyperGrowth of Twitter has limits? I think yes. Twitter, as I pointed out yesterday, is the preferred medium for Blogger, media people and enterprises (as well as other organisations). Therefore the core users of Twitter are as well the primary target group for companies like DELL as they are the gateway into SocialMedia Marketing. Bloggers and media people are synapses for the information flow within the Web. They value and spread the information towards potential customers of DELL. If I were Biz Stone, Jack Dorsey or Evan Williams I would make a BtB approach to one of the pillars of Twitter’s business model.

Twitter could capitalize on the approach of DELL and other businesses. It could for example sell paid premium accounts on the basis of the tons of data they have. They’ve of course recognized the enormous value that the Twitter generated data flow [information and meta-data] constitutes. Evan  Williams to WIRED: “We have a hell of a lot of data right now. And we’ll have an unfathomable amount in five years.” And to analyze and package the information of billions of tweets may be the most promising revenue stream. A strategic focus on blogoshpere and enterprises [i.e. a BtB approach] could turn Twitter into a money machine. Unfortunately this strategy conflicts with Twitter’s high flying plans to have 1 billion subscribers in 2013 and to develop itself into the largest mass medium ever….

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One Response to “Update: Twitter And Why The BtB Business Model Seems To Be Promising”

  1. Is Twitter about to become the Netscape of Real-Time-Web « MexxBuzz's Notes Says:

    […] Update: Twitter and Why the BtB Model Seems to be Promising […]

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