Today, Techmeme picked up Anil Dash’s blog post Nobody Has A Million Twitter Followers.  I think Anil is accurate in his assessment that 1,000,000 followers does not imply listeners.  However, Anil mentions metrics like response rates / click-throughs to tweets as being measured by calculating the clicks as percent of following (eg. a commenter, David Griner, notes that a recent Ashton Kutcher tweet to his link only  got a .14% response rate).

Number of followers should not be the denominator of response rate, nor does this logic make sense in understanding Twitter’s value.   In Griner’s case, where else would he have been able to get 6000 incoming interested visitors for free?  What is the value of these socially-culled visitors?  Did they tell their friends?  What was the quality of the referral?

Influence marketing metrics should perhaps be the more operative measurement for Twitter — its value is far beyond the narrow-minded reach of views, clicks and purchases of CPA and CPC.  Fred Wilson blogged this week about affiliate programs undervaluing links of  blog referrals.

Let’s combine some Malcolm Gladwell thinking and overlay that on Twitter.  When The Tipping Point was published, there was no Twitter or Facebook.  Gladwell uses the term Connectors as being the spreaders of influence.  He defines Connectors as people that have ~400 connections.   Before Twitter and Facebook, both on the ground and on the net, guerrilla marketers attempted to use influence marketing psychology to start word-of-mouth product trends.

Since Downtown NYC is considered a hub of early-adopter trendsetters and Connectors, it’s littered with billboards, stickers, walking ads all attempting to catalyze this phenomenon.  Daily Candy appeared shortly after The Tipping Point became popular.  Their newsletters were credited with tapping into the Connector and influencer segments of women’s fashion, and, at one time, was believed to have an accelerated impact on the spread of fashion trends.  It was later bought by Comcast for $125m.

Now, let’s ponder Twitter’s value influentially.  Picking a few familiar names - Anil Dash or Clay Shirky or Jack Dorsey - individuals that Gladwell would call both Mavens (people the public looks to for influence) and also Connectors.  Prior to Twitter, any of these guys could have reached theoretically 400 friends or so with a piece of information that they wanted to share.  But it’s difficult to imagine they could have emailed or spread something influential on multiple topics a day.  Not possible.  Now, most of these people are at a minimum followed by tens of thousands of other influential people.  You don’t have to be a mathematician to know that 400 times x is less than 20,000 times x.

So that’s where I basically disagree with Anil’s premise of seeing a gap in Twitter’s value due to bloated follower numbers.  It doesn’t matter whether their “organic” following is 25,000 or 2,000,000, because much of their important following (Gladwell uses the 80/20 rule, but my guess is it’s even more polarized) is a very small but very valuable number.

And best not to measure Twitter via silos of followers either.  The much more interesting vector is to look at the track results for bits of information, as opposed to people.  Twitter will now be a key decider of “social epidemics” - Apple Tablets, Google phones - responses within Twitter will now reach consumers before TV commercials, salesmen, and, in particular, before they click through an internet ad.  Even more powerful, many will be reached and influenced before they do a Google search, having already gone through the process of being influenced and deciding to buy or to act within the walls of Twitter and Facebook.  Sure, Google should still get plenty of the residual traffic and revenues for the purchase step, which traditionally has been a keyword search.  Yet, at the same time, Twitter will likely direct things first.  As Twitter and Facebook deepen their roots and continue to build not just superficial visits, but consistent hour-to-hour constant usage, more and more searchers may have already made their decision, registered, transacted, what have you, before many users decide they would want to initiate a search.

Information market value trumps individual people.  It doesn’t matter how powerful one person is, even the slightest echo chamber has more value.  Here’s an exercise:  Imagine a story that relates to Obama that you heard recently, and what you thought about it.  Ask yourself the question: Was it the statement that influenced you? or  Was it the echo chamber where you heard it that was the actual point of resonance?

Trends more efficiently organize in a petri dish of influential tweeters, bloggers, retweets, Facebook “like”s, Tumblr mentions, blog comments, etc.  Twitter is like a combo NYSE-NASDAQ for information; it is the hub.

Another possible fallacy in evaluating Twitter is looking at its economic contribution purely on advertising measurement results.  I know of no advertising medium anywhere built on anything other than content.  Twitter needs to be an editorial and social content vehicle first; without this, an advertising harvest would be impossible.   Google knows this well - often having to tweak its ranking formulations to weed out SEO and elevate true informational content.

So my suggestion is to hold off focusing on followers, click-throughs, and the usual visible metrics.  This is unlikely to be where the ultimate power game for Twitter is being played.  The game of influence is more obfuscated, less concrete, abstract to measure, yet much more powerful.   Metaphorically, the combination of the loyal user adoptions of Twitter and Facebook with the penetration of blogging and the downfall of print news are creating the first serious challenge to browser-based search as a means of mass influence.

Specifically, as students get more savvy with Twitter, one can imagine professors creating a hashtag for commenting during their class.

The overriding theme is the creation of instant dynamic groups by simply the communication of one nugget of information (eg here’s one: #uclapsych101jones).  For instructors who choose not to acknowledge and embrace this possibility, they simply run the risk of not being a part of the dialogue.   For instance, in a second iteration, it’s also easy to see students privately creating a more opaque hashtag and tweeting through their secret identities, launching an instant semi-private chat room during class.

Such dynamic groups will spread like H1N1.  It couldn’t have been the case when these pieces appeared this summer:

• Well circulated Matthew Robson Report (Morgan Stanley intern) from July.
• NYTimes article about Teens not tweeting from August citing ComScore.
• Mashable post on same subject also from August citing Neilsen.

Anyway, I’m not the first blogger to reverse the summer wisdom of Twitter not for teens; a number of news blogs, including SAI, Mashable and Brian Solls published the reverse trend from the more recent September ComScore report, which measures tons of growth in the youth demographics for Twitter.

Three other broad conclusions to note:

1. Real-time classroom use of Twitter necessitates more expert usage of the medium via live persistent search using Tweetdeck or an iPhone app instead of the Twitter.com interface.
2. Twitter value lies much deeper than trending topics and celebrities (my blog from the summer).
3. Measuring the web traffic of Twitter and using that to predict its demise is a fool’s game.

This is a pretty massive set of deals for Twitter, and although financial terms of the deals were not disclosed, this move puts them solidly on the road to an IPO instead of acquisition.   Once again, Twitter has outsourced it’s development, this time for real time search and advertising revenues.

Here’s a few reasons this move was highly strategic:

1. Google, and secondarily Microsoft and Apple, were the only likely buyers due to the high price of Twitter (now valued at over $1b) and the market cap required to absorb such an expensive purchase without revenue/stock price accretion, as I mentioned in my blog post earlier this year.   With the push of Bing, that competition had come down to two, with Microsoft being the weaker buyer and Google being the stronger, perhaps only realistic buyer that could maximize value from the purchase.  When there’s only one buyer, that’s not good for the seller.

2. The deals are a win-win for all in the financial markets.  Most companies acquire when the deal is accretive to their stock.  Twitter stands the most beneficial of the three for revenue multiples, as its revenue should have the highest growth rate.  A cursory glance at P/E’s from Google Finance show’s GOOG at 35 and MSFT at 16.   So at a fraction of the cost of acquisition, each of these companies will get 35x and 16x kickers in their stock price for every $1 of revenue they produce for themselves in the Twitter deal (after something like a 50% revenue share with Twitter), while keeping their respective $3b in the bank, which is what an acquisition would have cost.  And, even if some money had to be paid upfront, almost $3b in cash retained should earn at least $75 million in revenue a year.  Perhaps they each received stock as well, although there’s no reason to speculate on this one. Meanwhile, Ev, Biz and a collection of much of the tech/VC community as investors will now be on a rocket path to revenue from both major search partners, which opens the IPO door, where they will perhaps earn a much higher PE considering the growth potential of the real web, perhaps 25-40, or even higher (Google’s IPO PE was 118).

3. This lowers risk for everyone.  Twitter continues to be a tiny company, and building its own search and advertising infrastructure would have been a remarkable feat in 1-2 years.  Moves like acquiring One Riot search would have gotten them nowhere near this goal, which they could still do anyway on top of these deals.  It would have required hiring talent away from Google and Microsoft, making them far less friendly.  To get to its $500m-ish revenue estimates this year, Facebook has over 900 employees while Twitter has less than 100.

Now, everyone is on the same team to make the real-time web happen.

One of the rotating ads on the NYTimes home page today is promoting Air France deals to Europe using an @ sign. 

When I first noticed the AirFrance placement on the front page of the Times I thought, “Wow, I’m going to blog this Air France ad as being progressive on two fronts.”  

1. AirFrance is using its Twitter account in advertising to promote deals to Europe.  As airlines like @UnitedAirlines and @JetBlue use Twitter to promote special deals not available anywhere else, it was natural assume @AirFrance.us was tagging along with this marketing strategy.

2. The use of the @ symbol (saying Twitter without having to waste txt) for the advertising impression was more impactful for memory, even if the user doesn’t click through the ad.  

So my first conclusion was, great, triple bang for the buck.   A promotion of both Air France’s website and Twitter address with a shorthand announcement of special deals Twitter-only deals to Europe.  

Second conclusion, hmmm. 

A note to AirFrance marketing staff:  @airfrance.us is much more likely to mean http://twitter.com/airfrance.us than http://www.airfrance.us.  The problem is this address does not exist on Twitter.  In fact, it cannot exist because there are no “dots” permitted in Twitter account names.  AirFrance does appear to be using @airfranceus  to tweet.   Just for curiousity’s sake, I registered @airfranceusa, which was available.  

As businesses begin to use Twitter addresses in advertising, which I think does convey more value to a given ad, there’s going to be a few things for both Twitter and companies to consider - matching domains, trademarks, multiple addressing.

The benefits are two complimentary addresses - one for the “now internet” (special deals) and one for the traditional internet (booking flights, checking times).

There’s a very simple site to find out if Twitter is down (or if it’s just you).

istwitterdown.com

Simple, no ads, just a yes or a no.  Great.

 
Twitter has made two recent moves in the past week toward clarifying itself to the public:

• Twitter 101 for Business 
• New Twitter Home Page with Trending Topics 

Reading between the lines, these moves are on a macro level, and it’s confusing to me how they can be of practical benefit to Twitter currently.  They do address a fundamental complaint:  novice users don’t know how to use Twitter.  

However, Twitter management has grander plans to be the “pulse of the planet”, as we saw when TechCrunch released their internal strategy notes from this month’s hacking of internal Twitter management Gmail accounts.  

We don’t need Twitter to become the PerezHilton of news.  That would lead to a web business which is too shallow, and easily replicated.  To be the “pulse of the planet”, Twitter needs to go deeper.  $1b+ businesses are built on large customer bases, high value propositions and expert users.

Let’s look at the valuation that Twitter is trying to achieve.  Twitter is probably currently valuing itself at $1b-2b.  Based on the numbers from OpenTable’s recent IPO, this valuation implies a $100-200m revenue stream, approximately a 10x revenue market cap.   

It’s fine to help out the new Twitter users, great, but executing a strategy solely based around gathering new users, and giving them a 101 course, should not be the face they are putting on to the Twitterverse.  

In a commercial sense, Twitter management is acting counterintuitively to its ultimate bread and butter businesses which would certainly be pillared on the following:  Ads and Business Services.  

Catering to these markets can more directly bring them to their desired $200m revenue stream in a more timely fashion.  Time is of the essence, as the public may tire of Twitter in a year or two while they build these revenue channels, as could Google launch a successful service which sucks their content into an advertising-enabled platform.

Twitter’s recent moves play to two audiences:  Fortune 500 and  consumers.  They are missing the boat on growing the most opportunistic market: small to medium-sized businesses.  These are the businesses that benefit most from a Twitter presence.    This strategy more closely parallels tech companies that have been successful in CPC and SaaS markets and the customers that they enable.  Look at Google (web-based advertising), Apple (small/medium business hardware and consumer electronics), Microsoft (business software), SalesForce (business sales SaaS), and OpenTable (restaurant SaaS). 

Businesses need to have reach on Twitter.  They need to use marketing tools to grow large followings.  Otherwise, these potential advertisers and service marketers won’t care about Twitter as a market that generates customers.  Twitter’s blanket limiting of growth of streams and the continued inability to verify accounts for a fee make it extremely difficult for a business to use Twitter as a commercial marketing tool.   Twitter’s nonexistent staff for customer support for businesses (except Fortune 500 and celebrities) is hindering the growth in these less obvious, but vast markets.

The “trending topics” on it’s home page just dumbs down the content on Twitter to a few items that are in the news.  To succeed (e.g. get acquired or IPO with a $1b+ valuation), Twitter needs to be suggesting to users who land on it’s home page that it’s reach goes far beyond #iranelection and @aplusk.  

Google has primarily used a blank home page (well, until 5 minutes ago) — why?  this implies vastness, the ability to search for anything.   It implies the whole web.  But it’s search still misses the social real-time internet, a new vastness created from Twitter, Facebook, social networks and blogs.

Twitter’s home page needs to begin to imply its future — the whole real-time web.  That includes not just hot topics in the media.  It goes deep — what’s are doctors talking about in cancer research?  where are the sample sales in LA and New York today?  which schools are closed this morning due to Swine Flu in my zip code?  what is everyone saying about @fredwilson’s speech at the SXSW conference?   How can I find Giants tickets now?

It’s not an easy user experience/taxonomy/folksonomy to build, but the value that’s created from the deep real-time web will far outreach the mainstream media trending topics of latest news on Twitter’s home page.  The web of the Fortune 500 and celebridom is just one slice of the juicy real-time pie.   As for the rest of Twitter’s potential, tapping into Google, Apple, SalesForce sorts of customers is vital.  It’s the difference between a company worth $500m and $5b, perhaps even more.

Getting into Twitter’s trending topics provides superfast viral marketing exposure. Two recent promotions worth mentioning:

• today’s July 21 Starbucks free pastry day (Here’s the Mashable link to show the huge spike in Twitter traffic)
• Moonfruit (small UK development shop) 10 MacBook Air giveaway in early July, picked up in the Wall St Journal which took them from 400-47,000 followers in a week

The operative word is FREE though.  Promotions should have two of three key elements:

1. FREE goods
2. Clear value of giveaway and brand identity (Starbucks uses it’s own brand, and Moonfruit piggybacks the Apple brand).  
3. Low value, 100% odds - Starbucks free pastries
4. High value, perceived decent odds - Moonfruit was a small company giving away 10 MacBook Airs, one a day, so initial Twitter users must have perceived the odds as being fairly good.  Once the promotion took off into trending topics, the value of other users registering lent credibility to the promotion.

There was recently a ditty passed around the net called “The Year the Media Died”, which is kind of funny, as in “many-a-truth-is-said-in-jest” funny.  And somehow this strikes a chord as to how and why this is all happening and why it’s really true and there’s nothing that can be done.  The media is now the vanishing medium.  Once “The” media was the only way to get information from one point to another.  Collectively, it was a point of control.   Physical and monetary capital was once required to access people.  Presses, and ink, and trucks, and editors, and skyscrapers.  But now, it appears, the invisible hand and its legerdemains have shifted information exchange to social networks.  Experts exist; they are deemed experts by reactions of infinite arrays of influence circles, rather than an editor in Times Square, and they publish at zero cost.   All that is needed now, citing Howard Lindzon, is “social” capital.  And this time it wasn’t the messenger that was shot, for bloggers and professors, like Clay Shirky, are going strong; it was the message, it died, somewhere between the news room and our doorsteps.

It’s hard to know whether to laugh or cry when Wolf Blitzer goes to check what’s on Twitter as an activity of delivering the news.  ”It’s the greatest thing since the invention of the printing press” has lost its panache, and perhaps our typical “greatest thing since” expression will very well revert back to sliced bread.  

Here’s a well-put paragraph from a Tim O’Reilly blog post about where the web is going:

The Web is no longer a collection of static pages of HTML that describe something in the world. Increasingly, the Web is the world – everything and everyone in the world casts an “information shadow,” an aura of data which, when captured and processed intelligently, offers extraordinary opportunity and mind bending implications.

It can be awe-inspiring to watch an old model die as a new one comes to life.  The past 9-10 months (September 08 to now) have brought both the banking system and the media face-to-face with a juggernaut.  Much of what we’d seen in our recent lifetimes of business models had been the same.  Wash. Rinse. Repeat. Dr. Seuss, The Sneetches.  The banking industry and the media were often no more than a collection of Sylvester McMonkey McBeans simply taking a generic product, figuring out who next to sell it to, and repackaging it for sale.  But Dr. Seuss’s satirical scribblings were more poignant than he was probably thinking at the time.  The children’s book that comes to mind that I might metaphorically invoke is Eric Carle’s The Tiny Seed (my son Owen’s favorite book).  In this book, a tiny seed becomes a giant, most beautiful, flower.  But autumn comes, and the petals are blown off the flower, and the seed pod opens, scattering many tiny seeds into the wind.  

Old media has been one of the earliest adopters of new media.  How great for an article or a blog piece to be propagated and retweeted by its constituents.  But the pupil has overcome the master, as the value of a piece, or an opinion, is determined by its reception in social media.  Information now trades in a free market, no longer requiring a physical capital-rich medium of experts to relay its importance.

Little exhibits this more significantly than the way social media has impacted the building revolution in Iran.   That thousands of individual citizens in #Iran can protest an election, photograph an injustice, film a murder, type a micro-blog message, pass a link, ping those links through an underground network of proxies, to bypass a government, so that they arrive on individual laptops almost anywhere, next to a grande latte, where these streams of messages can then be considered by each reader on his or her own, then aired, and discussed, and what happens is that all of those people together respond.  And all of these separate actions can, and do, create a revolution.  

Would the media’s medium have done such a thing?  It is hard to imagine that we could ever go back to the time when we were able to trust the medium.  Perpetrator is large.

RevTwt’s FAQ reports that advertisements earn members 4-20 cents per “valid” click for CPC.  Members have the ability to select ads or use an Auto-Post feature. CPT ads appear to have a lot of restrictions, which is not surprising, considering the high potential for abuse.

There is significant explanation of clickfraud in the FAQ.  Over-reporting of clicks led to a site revamp in May with CPD (”click-fraud-protection”).   The site has changed hands a few times, here’s a quote regarding the various developer/owers:

RevTwt is a business unit of Wizag LLC, an incubator and holding company. The RevTwt website was formerly known as Twtad.com. TwtAd.com was first developed by a young Internet entrepreneur Luke Kling in March 2009, who passed it on to another young Internet entreprenuer James Simpson. Wizag acquired the website from James in late April 2009. 

Traffic seems light.  Quantcast estimates them at 7k users per month, although growing quickly as the site launched with it’s new domain in late May 09.