Where does twitter’s business model leave small companies?

Made Essential Reading on 12 April 2011 Felix Hemsley

Let me first set the scene. I recently read “Has Twitter abandoned small businesses?” over at The Wall UK which looked at how the high costs set by twitter are pricing the small businesses out of the game, unlike AdWords which allows every person no matter how small their budget to have a go!

With pricing starting at $5000 on Twitter’s marketing platform for its “promoted tweets” I am inclined initially to agree that small businesses are unlikely to be able to part with that kind of cash…but this did get me thinking about the whole concept of twitter’s newest evolution!

We are now in an age where individuals are becoming more savvy to the efforts made by marketers to tempt them, their web knowledge is greater than ever before, navigating the internet is second nature. All of this means that advertising in any format online is becoming increasingly approached with scepticism by the user. This scepticism can be seen with AdWords where users are clearly identifying them as marketing, where historically they were increasingly seen as “relevant results provided intelligently by Google”! But don’t get me wrong, in a search engine I believe that the interactive nature of the user and their reason for being there aligns perfectly with AdWords, and I believe Adwords can be a hugely powerful tool.

What I am picking at however is that in an environment where people are looking to discover and share content, is there really a sound business case for the promoted tweet? If there is, is it more powerful than trying to become an integral part of the conversation?

Whilst the new business model for Twitter could potentially alienate smaller businesses, it does have the potential to showcase larger businesses who do adopt it as being no more “connected” with their user base or customers than before on these social platforms. This will in effect just be another banner ad but in a social environment. That alone does not make them any more social than running an AdWords campaign!

On a personal note, I’ve had promoted tweets in my twitter streams, and have as yet not clicked on one. Why? Because when I see something that says “Promoted” I’m generally discouraged from interacting.

As a real world example, think about the last event you went to. Do you remember who sponsored the event? Maybe, maybe not, but what’s important is that I’m sure you got more value out of someone you met at the event and remember them much better than the sponsors logo which was put on every asset you were handed. That’s essentially what promoted tweets are, they are simply another impersonal (however targeted) advert which serves to gain exposure through paid media.

So, where does this leave the small businesses? Well having realised the financial implications of the promoted tweet option, they should look to leverage what they are good at:

• Treating their customers on a personal level
• Adding value by listening to their customers
• Building their users and customers into their programs

Small businesses have the ability to work on a much more granular level to build a network, not of “Facebook likes” or other half-hearted interactions, but of real relationships that matter. They are much more capable of creating a self sustaining community which brings valued customers and prospects together!

In a massive corporate enterprise, the infrastructure for managing such communities can be huge and often doesn’t have the time required to shake the hands of its members at the individual level. I can see how large enterprises would like the concept of the promoted tweet, it plays by their rules on their terms, they do not have to rely on employees engaging in conversations, they can simply follow their traditional paid media model in a brand new & evolving environment.

Only time will tell how this chapter of the monetisation of the social space pans out, but I will be very interested to know how long will it be before the users become savvy enough to the promoted tweets that their value to any organisation diminishes, large or small? And then, what strategies will we see coming to change the game once again?