Twitter, Facebook and other social networking sites have risen from humble startup origins to redefine how 10s of millions of people communicate on a daily basis. Even the enterprise has started to embrace them as tools; Salesforce.com recently added Twitter to its Service Cloud, which already includes a Facebook application.
Now that the form has firmly established itself, though, how can Twitter and Facebook start to generate more substantial revenue? For years, investors have been pouring cash into social networking sites with amorphous sales plans on the hope that a profit-generating angle would eventually come to life (or else that Google would swoop in and snatch up their little startup).
Twitter may have found something of an answer this week. The site, which allows users to send 140-character microblogs, or "tweets," announced on March 23 the launch of a Microsoft-sponsored site called ExecTweets, which collects executives' microblogging missives for the public's reading pleasure.
Later in 2009, Twitter also plans on starting commercial accounts with expanded features for businesses at an as-yet-unspecified fee.
"ExecTweets is an interesting deal; you can expect more of that, with sites deployed across multiple lifestyles-the next will probably be deployed across tech," Jeremiah Owyang, an analyst with Forrester, said in an interview.
Advertising, Owyang added, is one area in which Twitter is unlikely to tread as it hunts for revenue. "We know for [a] fact that ads disrupt the user experience, because users are there to communicate with each other, and ads would have to go into the editorial stream," he said. One more likely avenue for revenue generation lies in "monetizing the data, as with Salesforce."
Facebook, meanwhile, has taken steps into online advertising-but not nearly to the extent of MySpace, which seems determined to plaster much of its online real estate with ads.
"Facebook is clearly focused on growth, growth, growth," Owyang said, with regard to its features and new Facebook APIs for developers. Facebook's application platform could become a basis for attracting cash in the future, but Facebook CEO Mark Zuckerberg has been publicly reluctant to embrace full-throated monetization policies, even after Microsoft invested $240 million in the service.
Still, social networking holds considerable pull for users both inside and outside of the enterprise, and with that pull comes opportunities for investors to perhaps see some future return on their outlay. Ultimately, companies on the hunt for clients and customers may be willing to pay Twitter, Facebook and other social networking sites for access to their most important asset-their member lists.
Or, as Owyang asked rhetorically, "How much is lead generation worth?"