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Twitter develops tools for cash and stickiness

Karl Flinders

Twitter is in the process of developing tools and services businesses can use togenerate revenue for the freemicro-blogging site. It is also trying to retain users once they have tried out the service.

Twitter co-founder, Biz Stone, told Reuters users can expect these tools by the end of the year.

Twitter has rejected the possibility of selling advertising space to generate income.

"There are a few reasons why we're not pursuing advertising. One is it's just not quite as interesting to us," he told the Reuters Global Technology Summit in New York.

He said adverts alongside Twitter messages could annoy users and the company is not looking to recruit advertising executives.

"There are no people at Twitter who know anything about advertising or work in advertising. So we don't have anyone there to make or take those calls," said Stone.

The company has 40 employees and said it will double this before the end of the year.

Stone said Twitter would remain free for consumers and businesses. He added that the website would develop features for commercial users, such as lightweight analyticsand a directory of commercial accounts that would verify that businesses on Twitter are legitimate.

He added that Twitter is talking to mobile phone operators to make sure Twitter works on their networks and revenue sharing with carriers could be introduced.

Twitter has grown by more than 3,000% in the past year, according to figures from internet monitoring site Hitwise. Its share of UK traffic increased by about 33 times between February 2008 and February 2009. The site is growing 25 times faster than Facebook, which grew 123% in the same period.

But Twitter will struggle to grow as a business if it fails to convert the large volume of people that try it out into loyal, long-term customers.

More than 60% of people that sign up to Twitter stop using it by the next month, according to research carried out by Nielson Online in the US.

In his blog, David Martin, vice-president of primary research at Nielsen Online, said social networking sites that have made it big recorded better retention rates in their early days. "Even when Facebook and MySpace were emerging networks like Twitter is now, their retention rates were twice as high. When they went through their explosive growth phases, that retention only went up, and both sit at nearly 70% today."

Twitter co-founder Jack Dorsey told the Los Angeles Times that the company is looking at ways of getting new users hooked.


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