Editor's Comment: Twitter's funding conundrum

Marketing 10-Feb-09

Twitter's plan to charge commercial users for accounts has met with 'tweets' of outrage on the part of the UK marketing community. By and large you have told us that you are inclined, for the time being at least, not to pay.

The micro-blogging site, which is now gaining some real momentum, is
testing the waters to find its commercial model. Like many such online
phenomena, it may have been started by nerds in their dorm room at a US

college, but it is now a real business that has to find ways to recoup

the $20m it initially raised from venture capitalists. Having
turned down a reported $500m to sell to Facebook, it also needs
revenue to grow its capability to keep ahead of new competitors.

There is the view that, for the time being, Twitter is better off
continuing as it is, expanding its user base - and fame - before it
makes any real attempt to make money out of it. However, doing so could
leave it in a similar position to Facebook. The latter built a global
following with millions of subscribers, but is still failing to attract
credible marketing budgets. With the economic outlook becoming gloomier
by the day, Twitter needs to act fast. Its best bet is to set out its
stall now, not when its fame has passed its peak and its popularity is
on the wane.

Forcing companies to pay subscriptions for their commercial accounts is
one way to keep the investors happy. Some brands will pay; but others
won't, and will invest in alternatives. There are, by all accounts,
other revenue-gathering models that Twitter could explore. We will keep
watching with interest and report on developments as it works through
the process.

In the meantime, why not follow Marketing on Twitter? You can share your
views with us, and we will use it to 'tweet' the latest marketing news.
Find us at twitter.com/MarketingUK.

Lucy.Barrett@haymarket.com.