Seth Godin has an excellent post about how Twitter can align better with the interests of its users. In short, this basically means turning it into a paid service like HBO and rejecting advertisers:
If [Twitter] relentlessly sell the attention of their users, they will have a misalignment as they maximize profit. The advertisers will want ever more attention, and the users will want to avoid those interruptions the advertisers are paying for. Tension will keep rising as users feel trapped by a medium with few substitutes that begins to charge an ever higher tax in the form of attention wasted.
I think that actually, Twitter don’t have much of a choice. Facebook gets away with the most terrible ROI in the industry by putting ads that no one pays much attention to.
However, I have tested both Facebook advertising and Twitter advertising (via SponsoredTweets). Facebook cannot drive much traffic to your site but at least it gets your page LIKED on a regular basis. Some users will check your site eventually, even if you have to pay for a sponsored story.
The same amount of money spent on SponsoredTweets resulted in a quite a few clicks (as advertisers are paid by the click) but the percent of people who actually signed up for Riftforge was an abysmal 0.2. Yes, 2 in a thousand visitors. Compared to AdWords, which gets 20% conversion, this is 100 times worse.
I’ve seen some anedoctal evidence from book authors appearing on TV saying they got their celeb friends to post a link to the book (Amazon). Celebs with 1,000,000+ followers posted the link and all this noise resulted in a single purchase. Probably the celeb friend buying it via their own link!
So Twitter better offer a premium service to users because advertisers will get burned in no time. Of course, this is no secret in Twitter HQ, which explains why they haven’t rolled out mass ads yet.
P.S. If we view Zynga as a media-entertainment company (which in a sense it is), Seth might find it the perfect example of misaligning the interests of company and users in an attempt to maximize profits. If HBO was following Zynga’s example, it will go free to watch, giving you the first X minutes of any show for free and the longer you watch it (or the more episodes you’ve seen), the higher the price for the last X minutes of the show. Prices of $50 for the last 5 minutes will be frowned upon by the general public but some “whales” will actually pay them!