Twitter, Seeking Revenue, Launches Microsoft-Sponsored Site

Digital media’s hottest startup has online social networkers twittering about its first effort to drive revenue and build a viable business model.

Twitter Inc., the so-called microblogging platform that has taken pop culture by storm in recent months, has launched a Web site sponsored by Microsoft Corp. (MSFT) called “ExecTweets.”Microsoft declined to say how much it paid to sponsor the site, which is designed to allow corporate executives to message Twitter users.

Twitter’s move, coming just over a month after the company raised$35 million in venture capital and almost five months after it refused a $500 million buyout offer from Facebook Inc., offers the first glimpse into how Twitter will attempt to make money as online social networks struggle to spin their fast-growing audiences into gold.

Twitter, with just 29 employees in San Francisco, has seen its Web traffic grow 900% over the past year as politicians, business leaders and celebrities have made headlines with their tweets, and Web users from around the world have flocked to the service.

Comscore recently reported that Twitter.com was one of the fastest growing online social networks in February with over 4 million unique visitors for the month, up from 123,000 for the same month last year. It was the 14th largest online community that month, behind networks like MySpace, Facebook and LinkedIn.

As its users gain large online followings, Twitter has been increasingly viewed as a potent, viral marketing tool for brands trying to tap the vast reach of the Internet, even as the company hadn’t earned a dollar from its service.

ExecTweets.com seeks to become a revenue generator for Twitter. The site aggregates tweets, or short bursts of text using Twitter’s online messaging platform, from executives at major U.S. companies and organizations, like Coca- Cola Co. (KO), Best Buy Co. (BBY) and the Lance Armstrong Foundation, allowing those executives to talk directly to the millions on Twitter.

Matthew Dipietro, director of marketing with Federated Media, the ad networking firm that built the site, said ExecTweets is an early example of ways that major companies can use Twitter and other social networks for marketing. He noted that many companies have been leery of lending their brands to the uncontrolled online platforms created by social networks, but that is changing.

“The question isn’t about whether you should or shouldn’t be on social networks. The question now is how do you do it,” Dipietro said.

That question still lacks a clear answer, according to Matthew Fraser, author of “Throwing Sheep in the Boardroom: How Online Social Networking Will Transform Your Life, Work and World.” He notes that while professional networks like LinkedIn have built a business model by selling user data to recruitment firms, purely social networks like Facebook and MySpace have struggled, particularly as growth in display advertising has tailed off amid the recession. MySpace is owned by News Corp. (NWS), publisher of this newswire.

“The Facebook paradox is that every time they try to monetize their audience, there is a rebellion by users on the site, and [Facebook founder] Mark Zuckerberg backs down every time,” Fraser said.

Eric Franchi, senior vice president of business development with online ad networking firm Undertone Networks, said speculation is rife that Twitter could sell a premium version of its service to companies as a marketing tool, or that it may even wind up charging consumers for access to its platform.

“Monetizing social networking is not well done with standard, online display advertising,” Franchi said. “That works better with general content sites.”

By Nat Worden, Dow Jones Newswires

2 Responses

  1. […] Related Post Twitter, Seeking Revenue, Launches Microsoft-Sponsored Site […]

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