How to make Twitter profitable

For better and sometimes worse, Twitter is one of the most powerful forces onthe planet. Twitter has arguably played a critical role in at least two of thedefining political upheavals of our era: The Arab Spring and the election of apolitical outsider, Donald Trump, as president of the United States.

Every day,Twitter contributes to the political debate, the sharing of ideas and the widespread dissemination, via links, of news articles and the otherwise obscurefindings of academics and nonprofit studies. And, each day, this activity onTwitter contributes to meaningful, ongoing political debate acrosssocieties and across the political spectrum.

Of course, Twitter also is filled with conversations related to our everyday lives.Sometimes they are meaningful, sometimes they are not. But, for many people,Twitter plays a central role in how they connect with friends and family. Likeevery social platform, there is noise filled with high-minded discussions as wellas seemingly mundane conversations.

What is perhaps unique about Twitter is the dichotomy between this valuablerole in empowering and connecting people and its ongoing lack of profitability.With restructuring charges, Twitters net loss in the fourth quarter of 2016was $167 million, or 23 cents a share, and less than 1 percent year-over-year revenuegrowth. For 2017, the company has announced plans to achieve profitability,largely through staff cuts. Skepticism that profitability will be achieved is high.

At the same time, many believe these layoffs mortgage the companys future by cutting the sales force that generates revenues and the R&D staff thatmakes the service more appealing over the long term.In 2009, after writing a book arguing that extreme and growing economicinequality would lead to societal dangers, for our politics and the health of oureconomy, I became an active Twitter user. Over the years, my activity haswaxed and waned, but Twitter remains the central mechanism I use to sharemy ideas.

At the same time, as an internet marketer, I have developed Twittercampaigns for myself and commercial clients. The net result is that I have a strong understanding of how Twitter can build awareness and influence in the political, nonprofit and commercial realm. Most important, my belief in thefundamental value of the service, and the benefits it brings the world, is veryhigh.

A simple proposal

Twitter, like all social media, has evolved dramatically since its founding. Whatthe founders fully envisioned we cannot know. My guess is Twitters foundersnever envisioned corporate accounts with millions of followers. I believe theyset out to create a service that would connect people with each other.

Nonetheless, there is one thing we do know: Today, many business entitieshave millions of followers and communicate with these followers using Twitteras a tool to promote their products and services. This is free advertising, no ifs, ands or buts.

What is perhaps unique about Twitter is the dichotomy between this valuable role in empowering and connecting people and its ongoing lack of profitability.

So, heres a proposal to radically change the economics of Twitter: Chargebusinesses that exceed a set number of followers (perhaps 250,000) a monthlyfee based on their total number of followers. To provide a sense of scale, here arethe follower counts for a cross-section of well-known brands:

  • @TeslaMotors 1.4 million
  • @Verizon 1.7 million
  • @Pepsi 3.1 million
  • @CocaCola 3.4 million
  • @McDonalds 3.4 million
  • @Intel 4.7 million
  • @Marvel 4.9 million
  • @GoogleChrome 6.1million
  • @SamsungMobile 12.1 million
  • @Google 17.6 million

I suspect most of thesebusinesses spend large sums (with in-house personnel or outside agencies)planning and developing their Twitter activities a clear form of advertising that provides value, with no portion going to Twitter. Why would it be wrongfor Twitter to capture, through fees, a piece of the economic value its servicebrings these companies?

To assess the potential magnitude this change might have on Twitters bottomline, lets take a hypothetical example: Suppose Twitter collected an averageannual fee of $600,000 from 2,000 businesses. This wouldrepresent increased annual revenues of $1.2 billion. Of course,there would be costs associated with implementing this policy, but the upsideis enormous: Most of this $1.2 billion increase in revenues would drop straightto the bottom line.

The reality of value delivered

I dont claim to know what the right fee is, or how this fee should increase bythe number of followers involved. But, lets ask the most importantquestion: Would a major brand leave Twitter if a new fee of $50,000 per monthwere imposed? Companies with millions of followers derive far greater economicvalue than this monthly sum. Indeed, I strongly suspect many companiesspend far more simply staffing their Twitter-related social media campaignsand working with outside agencies. Of course, this would be a cost, which addsto these existing expenses. But, once again, I strongly suspect tweets bringthese companies far higher returns than this proposed monthly fee plus anysocial media management expenses. I also believe these companies know it.

In short, a central reason for Twitters profitability problem is that it has beenfar too good a deal for large advertisers (defined as any company with a substantial Twitter following, which means the company has an active,significant Twitter presence).

Yes, I think its legal

I have discussed this idea with a limited number of colleagues. Inevitably, theyask whether charges of this type, levied solely on companies with large followerbases, might represent some form of illegal price discrimination. Myunderstanding is that this suggested revenue idea is entirely lawful.

Heres how it can be done:First, lets take a worst case example that assumes, under the applicable law,corporations that are Twitter users have the same rights as people. Then, these charges could be defined as advertising fees on any Twitter user that has morethan 250,000 followers. (Remember, Twitter allows users to block followers, sono one forces a person or corporation to move from the free classification to thenew, higher-follower paid classification).

Second, discounts for different categories of advertisers (which can be definedby purpose or commercial segment) are, I believe, legal. As a result, individualsand entities with a non-commercial purpose, such as politicians, journalists,academics, news entities, governmental entities and all nonprofits could beexempted from these advertising fees. They would effectively receive a 100 percent discount. Indeed, significant discounts for nonprofits and educational institutions are commonplace across the spectrum of internet services.

Why would it be wrong for Twitter to capture, through fees, a piece of the economic value its service brings these companies?

Finally, the group that may present the most significant issue for this proposalare celebrities: movie stars, athletes, authors and musicians. One again, Ibelieve the issue of category discounts resolves this concern. Twitter coulddecide not to charge these people who for many Twitter users add value to the community or to charge a lower fee (a specific discount for this category).

Now, lets look at the alternative scenario, and assume corporations do nothave the same rights as people. Twitter can freely exempt all individualsfrom charges. Here, Twitter could require corporations to pay advertising feesbased on their volume of followers, with fees starting when a firm has morethan 250,000 followers (or whatever number is deemed appropriate). In this scenario, discounts would apply, as frequently happens now online and offline, to entities that have a political, informational or non-commercial purpose ( entities, political entities, governmental entities and nonprofits). The onedifference is that on Twitter these discounts would total a full 100 percent.

Adding value for corporate users

Next, Twitter could take a small piece of the large revenue increase discussedhere and create services that add additional value for these paying, largecorporate users. I can imagine a wide range of mechanisms that Twitter, withaccess to its firehose of data, could deploy to increase the effectiveness oflarge businesses actively using its service.

New services may be valuable, but are not necessary

In recent years, Twitter has based its path to profitability on serviceenhancements designed to increase user engagement and growth, and on atransformation into a media consumption platform. Twitters recent loss toAmazon of its marquee deal to stream NFL Thursday night games casts anadditional shadow on this often-questioned media-related strategy.

As an active Twitter user, I also can imagine a wide range of serviceenhancements that would increase my engagement. For example, I simply cant imagine why Twitter is not the premier source for an automated, real-time feedof the personalized news topics that meet my interests. The existing News, Trends and #search features fall short of satisfying this craving. However, issues associated with creating more engaging features are outside the scope ofthis article.

Nonetheless, new service features, while desirable, are not needed for Twitter toachieve far higher profitability: A radical shift in its revenue model will enableTwitter to achieve the profitability it merits. Twitters existing user base already delivers enormous marketing and advertising value to businesses. To date,Twitter, in contrast to other media, has not sought to capture an appropriateshare of the value its service creates for businesses benefiting from theuse of its platform.

Jack, give me a call

Jack Dorsey, we have never met, and you probably resent people like mesuggesting ideas that no doubt you have considered and rejected. But, lets face it: Your business is not improving. You are at a crossroads: You can be Yahoo(without a buyer) or a reimagined business, with Facebook-like potential. Isuggest you choose the latter. Lets talk.

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5 ways inclusive marketing can benefit your business feat. Nigel Barker

Inclusive marketing is a technique that consumers may not be able to pinpoint, but for many businesses, it’s the secret ingredient behind creating ads that set out to empower people and create confidence amongst consumers.

Inclusive marketing is marketing that doesn’t specifically target one demographic nor does it rely on the traditional stereotypes we set up amongst ourselves and with other people

On the other side of the coin, not all brands utilize inclusive marketing correctly. There have been a handful of brands over the past several months who have tried to take a stab at inclusive marketing, but to their dismay, their message was not received by the masses in the way they had hoped (looking at you, Pepsi). However, when executed correctly, inclusive marketing has the potential to make serious impacts for any business of any size.

Nigel Barker, internationally renowned photographer whos been highly esteemed for his 17 seasons as photographer and judge on the hit TV show Americas Next Top Model, has spent majority of his career working on marketing campaigns and advertisements for a plethora major fashion, makeup, and beauty labels. So who better than Baker to help break down the ins and outs of inclusive marketing?

Nigel stopped by #BizChats, Mashable’s business show, to share with us the five simple ways any business or brand can appeal to a more diverse audience in an authentic way.

1. Use philanthropy, there is a charity for everyone

Barker says: “The most important thing is to think about a cause what’s most important to you.” Baker shares his experience with working on a Nine West campaign with a social target on breast cancer. Using the technology of FitBits, they tracked every step that was taken by models. The advertising campaigned garnered more than one billion views within a month.

2. Be social, throw parties to bring people together.

Barker says: “As a company, it isn’t’ just the advertising campaigns, it’s about being with the people and bringing them together. It’s the unconventional, yet important side of marketing and opportunity for people to be in a community.”

3. Use health and fitness as a common ground

Barker says: “Working out with people is a new great way to break down boundaries, market your personality to other people, and work together.”

4. Music is one of the best ways to bring people together

Barker says: “Music is probably the number one way to touch someone. It’s nostalgic, it speaks to both the past and the future. The sounds resonate with in ways that are special.”

5. Humor is a powerful way to disarm people and help them see your point

Barker says: “[Humor] is probably one of the most powerful tools we have. One of the most important things in life is having a giggle. We don’t do it often enough. Having a sense of humor and being able to poke fun at yourself is important.”

Missed the show? Don’t worry! Re-watch the episode in the video above.

WATCH: Woman uses Starbucks Unicorn Frappuccino to spread some magical news to her husband

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Amazon wants influencers with ‘large followings’ to sell its products

The host of the popular YouTube channel 'What's up Moms' was one of the first enlistees in Amazon's new influencer program.
Image: screenshot

Amazon is seeking social media celebrities.

The online shopping giant quietly launched a new program this week in which influencers with “large followings” can apply to host their own stores on its site in exchange for a commission on products sold.

TechCrunch first reported the news on Friday.

The program, currently in its beta testing stage, appears to be a more exclusive version of Amazon’s existing affiliating marketing service. The latter allows anyone to earn a cut of sales profits by posting product links in blogs or websites, launching customized stores and otherwise promoting goods on the site.

The new effort is limited to people whom Amazon judges to have sufficient follower counts, posting frequency and quality, and audience interactions.

It’s not clear whether the certified influencers will get a better commission than the ordinary affiliates.

Amazon didn’t respond to our request for comment.

Influencers will get their own vanity URL on Amazon’s domain, where they can choose items from Amazon’s inventory to spotlight.

For instance, the host of the YouTube channel “What’s up Moms,” one of the first enlistees in the new program, sells parenting and household goods on her page and plugs them in her videos.

The store of YouTube channel “What’s up Moms”

Image: screenshot

The program has the potential to essentially provide personalized advertising for Amazon among people with some of the biggest megaphones on the internet. Because influencers are paid only in commission, it also sidesteps the clunky FTC-mandated promotional disclosures that usually bog down social media product promotions.

TechCrunch reports that only a “small group” of influencers have signed on so far, and Amazon is still testing the waters to determine whether to move forward with the program.

WATCH: Mom compares Amazon drone to an eagle catching a fish

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‘I cant trust YouTube any more’: creators speak out in Google advertising row

Inconsistencies behind the companys ability to police advertising on controversial content are coming to light

Googles decision-making process over which YouTube videos are deemed advertiser friendly faces scrutiny from both brands and creators, highlighting once again the challenge of large-scale moderation.

The company last week pledged to change its advertising policies after several big brands pulled their budgets from YouTube following an investigation that revealed their ads were shown alongside extremist content, such as videos promoting terrorism or antisemitism.

Havas, the worlds sixth largest advertising and marketing company, pulled all of its UK clients ads, including O2, BBC and Dominos Pizza, from Google and YouTube on Friday, following similar moves from the UK government, the Guardian, Transport for London and LOreal.

Google responded with a blog post promising to update its ad policies, stating that with 400 hours of video uploaded to YouTube each minute we dont always get it right.

However, the inconsistencies behind the companys ability to police advertising on controversial content are coming to light and its not just advertisers who are complaining. Some YouTube creators argue their videos are being unfairly and inconsistently demonetized by the platform, cutting off their source of income that comes from the revenue share on ads placed on videos.

Matan Uziel runs a YouTube channel called Real Women, Real Stories that features interviews with women about hardship, including sex trafficking, abuse and racism. The videos are not graphic, and Uziel relied on the advertising revenue to fund their production. However, after a year, Google has pulled the plug.

Its a nightmare, he said. I cant trust YouTube any more.

Its staggering because YouTube has a CEO [Susan Wojcicki] who is a feminist and a big champion for gender equality, he said, pointing out that there were other far more extreme videos such as those promoting anorexia and self-harm that continued to be monetized. He also referenced PewDiePies videos featuring antisemitic jokes that were allowed on the platform for months.

Its bad that YouTube attempts to censor this very important topic and is not putting its efforts into censoring white supremacy, antisemitism, Islamophobia, racism, jihadists and stuff like that, Uziel said.

He wants Google to be more open about how exactly they moderate content. I want them to be transparent about what they think to be advertiser friendly, he said.

Google currently uses a mixture of automated screening and human moderation to police its video sharing platform and to ensure that ads are only placed against appropriate content. Videos considered not advertiser-friendly include those that are sexually suggestive, violent, contain foul language, promote drug use or deal with controversial topics such as war, political conflict and natural disasters.

Transgender activist Quinby Stewart agrees there needs to be more transparency. He complained after YouTube demonetized a video about disordered eating habits. I definitely dont think the video was even close to the least advertiser-friendly content Ive posted, he said.

QueerBean (@QuinbyStewart)

lmao of course the first video i had marked as not advertiser-friendly was the one about my disordered eating habits

March 20, 2017

He complained to the platform and the company has since approved the video for monetization.

YouTubes policy is just very vague, which makes sense because I think demonetization needs to be handled on a case-by-case basis. Their policies seem more reasonable when you ask a human to check it, but the algorithm that catches videos originally is really unfair, he said.

Sarah T Roberts, an information studies professor from UCLA who studies large-scale moderation of online platforms, said that large technology companies need to be more honest about their shortcomings when it comes to policing content.

Im not sure they fully apprehend the extent to which this is a social issue and not just a technical one, she said.

Companies such as Google and Facebook need to carefully think through their cultural values and then make sure they are applied consistently, taking into account local laws and social norms. Roberts said the drive to blame either humans or algorithms for decisions was based on a false dichotomy as human values are embedded into the algorithms. The truth is they are both engaged in almost every case, she said.

The fact that it is now hitting Googles bottom line should be a wake-up call. Now its financial and is going to hit them where it hurts. That should create some kind of impetus.

The Guardian asked Google for more clarification over how the moderation process works, but the company did not respond.

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Google’s bad week: YouTube loses millions as advertising row reaches US

Major brands including Verizon and Walmart pulled their ads after they were found to be appearing next to videos promoting extremist views or hate speech

Its been a bad week for Google, with major brands pulling millions of dollars in advertising amid rows over extremist content on YouTube.

In the US, the telecom companies AT&T and Verizon, as well as the pharmaceutical company GSK, Pepsi, Walmart, Johnson & Johnson and the car rental firm Enterprise, have all pulled advertising from Googles video-sharing platform, a contagion spreading from Europe, where a number of high-profile advertisers pulled out of YouTube following an investigation by the Times.

Major brands content was found to be appearing next to videos promoting extremist views or hate speech, with a cut of the advertising spend going to the creators.

Verizons ads were featured alongside videos made by Egyptian cleric Wagdi Ghoneim, who was banned from the US over extremism, and the hate preacher Hanif Qureshi, whose preachings were said to have inspired the murder of a politician in Pakistan.

We are deeply concerned that our ads may have appeared alongside YouTube content promoting terrorism and hate, an AT&T spokesman said in a statement. Until Google can ensure this wont happen again, we are removing our ads from Googles non-search platforms.

Following the exodus of some of its high-profile advertisers, Google has publicly apologized and pledged to give brands more control over where their ads appear.

This marks a turning point for YouTube. For the first time, its dealing not only with reputation damage but revenue damage, said Alex Krasodomski-Jones, a researcher at the thinktank Demos.

YouTube might purport to be a video-sharing service, but as with Googles search engine and Facebooks social network, the platform is really about one thing: advertising. So when theres a problem with advertising like this, its a big problem, Krasodomski-Jones said.

The row highlights an uncomfortable fact about advertising in a digital age: most brands dont know exactly where their online advertising is running. Black box machines are now largely responsible for the placement of ads online, using complex trading systems that try to get the right message in front of the right person at the right time for the the cheapest possible price. This process is called programmatic advertising. When an ad appears against a piece of content, its not always clear whether its been shown based on a persons previous browsing behavior, interests, or demographic data or because the brand is affiliated with a particular content creator, such as a YouTube star.

There has always been good placements of ads and bad placements of ads and media buying companies have always prided themselves on trying to get the context right, said Charlie Crowe, chairman of the media and marketing publisher C Squared. The difference in the online world is that its all done by an algorithm. The human element is taken out of the equation, so there are problems.

Programmatic advertising has been largely fraudulent since its inception, and there are many companies in the marketplace including Google to have made vast profits out of the naivety of the advertisers, who havent really known what theyve been buying.

The dispute adds weight to demands for companies such as Google to take more responsibility for what is on their websites, as Facebook was forced to do in the wake of the fake news scandal.

YouTube already provides brand safety controls for advertisers, allowing them to pick what types of videos they are happy to be associated with based on keywords. The platform also advises creators about the types of videos not considered advertiser friendly, including content thats sexually suggestive, violent or dealing with a controversial subject matter. However, with 400 hours of video uploaded to the platform each minute, its a challenge to keep unpalatable content completely quarantined from paying customers.

Fifteen minutes of browsing YouTube by the Guardian was enough to find T-Mobile ads on videos about abortion, Minecraft banners on videos about snorting cocaine and pre-roll ads for Novartis heart medication running on clips titled Feminism is cancer.

They need to get better at the management of what is brand-safe and what isnt, said Gabe Winslow, of the digital marketing agency Ansira.

Advertisers and agencies also have a responsibility to audit their campaigns to ensure that their ads appear in the desired location, he said.

This squabble is indicative of growing tensions between the advertising industry and technology companies such as Google and Facebook, which have become indispensable partners and, in some cases, competitors.

Silicon Valley technology companies completely dominate the online advertising market. According to a 2016 study, Facebook and Google accounted for 90% of the growth in the online advertising industry. All other online media companies are competing for the scraps.

The more powerful they become at the expense of traditional media companies, the harder it has become for advertisers to negotiate favourable terms. The current YouTube boycott offers some leverage for demanding better, independently verified data and controls.

Theres increasing resentment among agencies and publishers [towards Google] thats difficult to talk about given its sheer power, Crowe said. This issue has given them a sense of schadenfreude.

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