Clearly, their financial backers expect some kind of monetization. I think if users see some kind of ads as what Twitter needs to scale their service and achieve higher reliability, they will be content.

I'm not into Twitter much, but the complaints I hear from addicts are all focused on outages and reliability issues.

The investors will definetly like to see some revenue thats why they invested into it.So there is no surprise that we will see advertising on twitter.

• How will the advertisers target specific demographics (pc enthusiasts, right wing, left wing, homemakers, parents, teens, tweens)? How will they segment twitter users into narrow niche channels in order to broadcast advertising that appeals to them?

• How will the advertising system divide discussion topics into channels (travel, health, domestic products)?

• What kind of conversion rates do you expect from twitter users?

...thats why they invested into it.

Not necessarily from advertising. Twitter's inventor is the same guy who came up with blogger, Evan Williams [economist.com]. The product was never designed with monetization in mind. Twitter is a typical "build first figure out monetization later" project. Despite it's web 2.0 pedigree, the lack of built-in monetization is a feature that makes it resemble web 1.0 failures, and a few sucesses. Which is almost another way of saying, Build first and cash out when G/Y/M buys us.

[edited by: martinibuster at 5:16 pm (utc) on Aug. 19, 2008]

All of the above questions may best be answered by the next Twitter owners. :)

In the end, Twitter will most likely be sold and become a hood ornament to another service, like Gmail is to Google (GOOG) or Hotmail is to Microsoft (MSFT). The corporate buyer won't get much ad revenue, but it will pull millions of communicating consumers closer to its own business model.

Twitter could create an algorithm to analyze your messages and your friends' messages to target ads based on keywords. For example, if you or a lot of your friends tweet about iPhones they might send you a tweetvertisement about an iPhone app.

Twitter could create an algorithm to analyze your messages and your friends' messages to target ads based on keywords.

Heh! They might be late to the game. There are plenty of third party apps that have been developed that will do that for you. I've been in Protected mode so the apps are useless in scraping my Tweets from a Public Timeline. And, since I monitor my small number of Followers, I know that they are not using my Tweets from a revenue generating standpoint.

That is not to say that there are not a plethora of others monetizing the Twitter Public Timelines. Sugarrae recently found some AdSense stuff going on with Tweets and Google Cache. So, they may be trying different options. ;)

It was recently reported that Google expressed disappointment in MySpace's performance. FaceBook is still burning through millions [techcrunch.com]. Web 2.0 smells a lot like Web 1.0. Sorry if I don't share the enthusiasm but the champagne at this party went flat during the last dotcom bubble. I can't see a general community site being anything other than a poor advertising vehicle.

Community sites that focus on a specific niche, or have organizing channels, have better value because you can place the users in a demographic/niche bucket, something that Twitter currently does not do. Although with a few [webmasterworld.com] exceptions to that rule [webmasterworld.com], that value is still limited because the members of a focused community may not necessarily be anywhere near a buying cycle. Yet even with those limitations, a focused community site is head and shoulders a better advertising value than a general community like Twitter.

One method to monetize Twitter is to allow advertisers to target the followers of popular Twitterers. But Twitter screwed that up by limiting followers to 2,000. Oh joy.

Twitter isn't DOA or dying, but imo it's going to have to turn it's focus from simply keeping the system online to making it viable for advertisers.