By Ethan Lyon, Senior Writer
Twitter has struggled for a long time to find a profitable business model. The wait is finally over and the microblogging site has turned a profit. Twitter will make search deals with Google and Microsoft’s Bing for $25 million. The deal will make tweets searchable by both search engines — Google will generate approximately $15 million and Bing will fetch $10 million.
While Twitter is only now seeing the fruits of their labor, entrepreneurs and companies have been monetizing millions of Twitter users for some time now. Recently, Dell surpassed $3 million it made by using Twitter earlier this year to reach an astonishing $6.5 million through business referrals. Beyond business referrals, sponsored tweets and direct advertising have been profitable revenue streams for many companies. Here are ways companies are making money from Twitter’s users:
Dell is seeing profits increase in lock step with their rise in popularity on Twitter. Brand Republic reported, the Delloutlet account (@Delloutlet) has recently grown from 640,000 followers to 1,468,249. Over $1 million has been made from @Delloutlet referrals for their “certified refurbs, scratch and dent and previously ordered new Dell products.” Furthermore, Dell’s Twitter operation in Brazil @DellnoBrasil has turned a profit of $800,000 in eight months. Twitter is a powerful business referral tool. For those influencers — like Dell — at the upper echelons, referrals can generate significant revenue. While you might not see direct revenues from your Twitter account, business referrals can make a significant impact on your bottom line.
More direct ways of making money have been through sponsored tweets. Essentially, a company leverages your followers to increase their brand awareness and traffic referrals through your tweets. Twitter has arguably become more of a “spammy” site due to these techniques. Furthermore, the FTC’s blogging crackdown takes aim at these often times elusive practices. To create more transparency in sponsored links, Brian Solis suggests incorporating “$,” “spon” and “paid” into endorsements. Twitter still remains very much like the wild west — with little order or regulation.
Banner ads generate profitable revenues on blogs and online news publications, why not Twitter? Magpie & Friends has built an advertising platform that pays users to sell their tweets. Very much like Google AdWords, there is a bidding system whereby advertisers bid on keywords they want to associate with their ads. The Wall Street Journal discusses the main challenge of advertising on social media in general: “If advertisers can tap into its network free of charge, why would they pay the company to do so?”
Twitter finally joins the ranks of its social media peers, (i.e. Facebook and MySpace) in turning a profit. “Until earlier this year, Twitter wasn’t even focused on revenue — let alone profit,” writes Bloomberg.com. Instead it was focused on making the best possible product. Moving forward, we look forward to seeing Twitter grow into not only a better microblogging site, but a profitable one.
Image by Pierre Amerlynck from Stock.Xchng