Twitter CEO Biz Stone (great name) is the latest to play the we don’t need no stinkin’ ads game.
“There are a few reasons why we’re not pursuing advertising — one is it’s just not quite as interesting to us”
— Twitter CEO Biz Stone, Twitter sees tools, not ads, for revenue
I love that. Chalk one more up to the mentality of what feels right must be right. People do what they love and succeed wildly and then assume that this belief should guide all their decisions.
Few of us like having ads on our site. Google used to say they wouldn’t have ads, that they would make their money from business solutions. Now they run the world’s most successful advertising networks. Then they said they wouldn’t put ads on their Image Results pages because they couldn’t see how that would help the User Experience. Well, I just looked at their Image Results page and saw their ads.
A second error I see in Biz Stone’s statement is his assumption that Twitter is going to have great tools that businesses will buy. And that somehow the commercial interest in their tools will be big enough to cover the expenses of the free product.
That’s another error of wrongly extrapolating from a single anomaly to a bigger pattern. Twitter is not a great technology. It’s not a great product. It doesn’t have a great business model (OK, it has no business model).
Twitter got lucky. I’m not just saying this as a sour grapes “how come we never get lucky” kind of guy. Our site, Answers.com, was just ranked by ComScore as the 25th biggest site in the US (by unique visitors). How did we do it? We got lucky. Sure, we made some good decisions, did some great work, had some great people pool their efforts into building up our content database, technology, etc. And we got lucky. There are thousands of companies that make good decisions, work hard, do the right things, and go nowhere. And plenty of companies that get breaks and fail to capitalize.
So congratulations to Twitter for maximizing their breaks, and working hard to create a great success. Technology, product, and community all came together perfectly. But their key assets are their user base and content stream, and it’s going to be awfully hard to leverage those other than by some form of advertising.
A lesson they can learn from Google is to try to find a better way to do ads. Google successfully combined the two models that were out there: the banner ads that most sites were using and the paid inclusion mechanism pioneered by GoTo (which became Overture, and was then bought by Yahoo!). Somehow the two models which were each considered somewhat offensive or annoying on their own became perfect when combined into Sponsored Links. Google made a fortune and kept their users happy.
I don’t know whether or not Biz Stone believes what he says. And as long as he’s building up his user base he can get lots more funding. But eventually you have to stop paying the bills with venture capital.
Most likely ending to this story: Stone sells his company to one of the Web’s giants (and there aren’t many of those), who will monetize the user base and / or content stream they acquired.
Update: Danny Sullivan interviewed Biz Stone and asked about his no ads quote:
The reaction to his quote caught Stone by surprise. He’d assumed people understood he was talking about banners.
“People are always asking us, ‘Are you going to put banner ads up?’ We’ve been saying over and over that we’re not going to put those ads on the site. I came to work and saw all these new articles [suggesting Twitter would take no types of ads at all] and said ‘That’s not what I meant. I clarified and said, ‘There’s tons of good opportunity. If you’re on Twitter and looking for something, we’d want to do it in some smart, relevant interesting way.”
So Biz Stone says he was misinterpreted by the Reuters article, and that indeed they will consider relevant non-banner advertisting opportunities. Thanks for the clarification. Now it all makes sense.