Twitter has over 190 million users, processes approximately 50 million tweets per day, and is a new-media favorite.  Their business model is fairly simple: aside from licensing fees to search its contents, Twitter currently pulls from three revenue streams—promoted trends, promoted tweets, and promoted accounts—which should continue to grow alongside the network. So, what’s the problem? Simply put, Twitter is not supporting small businesses as well as it could—or as well as it needs to in order to keep and attract users and marketers to Twitter.

Until Twitter partners with small and medium-sized businesses (SMBs), or creates new products to do so, the value of their platform will remain largely untapped.  However, any shift requires dutiful consideration of all 190 million Twitter users, who value the ad-free, simple time-line space of their Twitter worlds and do not want them disrupted.

Can both needs be satisfied? Indeed, they can.

Some minor, if important, platform changes can allow Twitter to maintain its user freedom, simplify usability for its consumers, and help the company thrive.  By shifting from offering only the current “user-centric” feed to offering at least one “attribute-centric” feed, Twitter can promote growth, offer users options, and increase revenue.

Simplicity can be deceiving

The current Twitter timeline is 100% “user-centric,” meaning that the only information ever thrown into a user feed is based on the user’s choices.  The simplicity and ease-of-use of this model are extremely attractive.  However, this unilateral approach, despite its pureness, may be impeding rather than unlocking the most value for the most users. 

Google faced a similar problem as a 100%“content-centric” search engine, reluctant at first to embrace variations on the single, elegant search engine.  Eventually, however, the realization took hold that the regular search engine was more (not less!) powerful when combined with vertical search offerings like Google Scholar and Google Local.  These verticals allowed for greater organization, efficiency, and control, ultimately improving the user’s ability to access content. 

Local Feed

While down-selecting to hyperlocal is a cool feature (Business Insider) it cannot, on its own, monetize Twitter’s potential relationships with SMBs.  Specifically, a “location-centric feed” (one “attribute-feed” option) has the potential to create huge economic value for SMBs and Twitter (hereafter referred to as Twitter Local).  For example, when a user walks to a new part of town, rather than trying to decide which restaurants to follow, instead the user can quickly identify willing patrons with discounts by a local function on the menu bar, which might look like this: 

Of course, lists and other third-parties handle some of these issues, but Twitter can also leverage some of these filtering tools to its own benefit.

Benefits

There are several ways that Twitter Local can benefit users and partners.

Let’s deal first with revenue, which itself is segmented into two parts:

1)      Similar to Google Places, Twitter may be able to charge interested advertisers a monthly rate to be placed into the Twitter Local feed.  Perhaps even a tiered offering based on distance from user would work, like a series of concentric circles with different price tags.

2)      Twitter Local has the unique opportunity to mirror other successful online companies by providing vendors with an ROI metric.  For example, Google utilizes click-through-rate (CTR) and cost-per-click (CPM) to provide vendors with highly targeted feedback on various advertising campaigns.  In the same way, Twitter Local might employ a deal-through-rate (DTR) to provide meaningful metrics to SMBs (see “discount on jeans” in graphic above). 

Assuming that Twitter employs a self-service platform, similar to AdWords, Twitter Local can greatly increase the marketplace for deals.  Specifically, Twitter Local is filling the information gap that prevents many transactions from taking place.  In fact, the overall market will increase (measured by volume of sales) because (i) filling the information gap connects more buyers and sellers, and (ii) the information itself increases quantity demanded.  Thus, Twitter Local will allow SMBs to better match supply with demand, providing much better price discrimination (see “cupcakes” example in graphic above). 

In addition to the economic benefits to consumers and partners, there are a couple of reasons to believe that Twitter Local might be more popular than other local products: less searching and no checking in.  As has been discussed elsewhere (The Web is Dead), people are growing increasingly less likely to enjoy surfing for information, and the push nature of Twitter Local puts potentially high quality information directly into feeds.  It also eliminates the need to “checkin”, a function associated with some popular geolocation applications like Foursquare and Gowalla.  Consumers (author included) are already suffering from “checkin-fatigue” and Twitter Local would be a welcome addition or supplement to the input-required alternatives. 

The Results

A location-centric feed would share some common features and functionality with AdWords - the most successful partnerships with SMBs ever – that contribute billions of dollars to GDP (Google¹).  Assuming that Twitter Local can properly filter spam and have wide reach, it has great potential as a tremendous value creator.

The changes to the user would be slight as, after all, the location-centric feed would still be opt-in only, meaning users don’t even have to click on that menu option.  But the results for usability and partnership with SMBs would be empowering, perhaps even establishing a mirror market to AdWords.  Twitter’s adoption of this attribute-centric feed into their platform would benefit the service and its business potential, bolstering both users and revenue results.

(1) Estimate indicates that total economic impact of search and AdWords is $54B, given assumptions for multipliers on follow-on revenue opportunities for search and AdWords.  

“We want to instantly connect people everywhere to what’s most important to them.” @dickc

Twitter’s new mission statement is 80 characters long but needn’t be more than 40: instantly, connect, everywhere, and important are the four words essential to both understanding Twitter’s success and moving the platform forward from a compelling idea to a powerful, ubiquitous force in the marketplace of information and commerce. 

First, Twitter needs to define instantly and clarify if they want to prioritize ease of use or speed of use. Second, one of Twitter’s greatest attributes is allowing users to connect over a continuum of intimacy and familiarity, and they need to leverage that strength as web surfing continues to wane. Third, everywhere clearly means internationally, but Twitter could also utilize its platform to magnify hyperlocal culture as well. Finally, important demonstrates how two of its current attributes—the hashtag culture and the asymmetric follow—have the potential to make Twitter more relevant than its counterparts.

Instantly

Twitter’s real-time attribute is one that truly differentiates it from other platforms who have tried to mimic this ability with varying degrees of success. For example, Google has rolled out Google Instant to increases access speed and Facebook has tried to encapsulate the real-time contributions of its ecosystem members with its publication of Facebook Trends.

But the word instantly is actually confusing; does it mean rapidly or easily? We’ve entered an age when these concepts are often synonymous. Or more precisely, we assume that ease relies on rapidity. To distinguish these, however, is important, particularly in dealing with information.  For information goods, the goal is connecting users to their key interests easily, with rapidity playing an important supporting role. One of the issues that Google is facing right now is that the information obtained from queries is not as relevant as it once was, even as the speed of access has increased.

I hope Twitter will consider the tradeoff between ease and speed, especially as it relates to onboarding new users. For example, Twitter could provide new users with the opportunity to rate a few Tweets or users in the same way that Neflix leverages collaborative filtering to improve recommendations for an individual’s queue. In the end, the real-time feel of the timeline will only be enhanced if the task of selecting people to follow is more digestible, even if that task takes a little longer for each user. 

Connect

Connect is an appropriate word to describe what Twitter does. It describes the correct intimacy level between Twitter followers, though not the intimacy level of friends on Facebook or information on Google. For example, on Facebook, we say “he defriended me.” We don’t say, “he disconnected me.” Furthermore, the coolness of our relationship with Google search results might be described as “linking to our results” not “connecting to our results.” I believe one of Twitter’s greatest attributes is that it allows users to connect along a continuum of intimacy. Twitter can connect us with friends and family (high intimacy, high familiarity), but it can also connect us to Conan O’Brien (low intimacy, high familiarity) and Whole Foods (moderate intimacy, moderate familiarity).

Twitter’s use of connect also connotes that they’ll be the ones doing the connecting, and the user won’t be doing as much searching.  And of course, it’s the perfect time to be marketing such a function. Anderson and Wolff (1) asserted in Wired Magazine in September 2010 that the “web is dead.” First, they suggest that “fast beats flexible,” meaning applications that are designed and maximized for a single purpose are gaining more prominence when compared to the multifunctional and adaptable web. In addition to the increasing preference of consumers for focused functionality, consumers are routinely checking fewer sites. In 2001, the top ten webpages accounted for 31% of all pageviews; by 2010, they accounted for 75% of pageviews. These two traits are linked, and they point to a future where platforms that reduce noise, as Twitter has the potential to do, are in even greater demand.

Everywhere

Twitter is expanding internationally, as it did officially last week in Korea; but everywhere could also suggest intra-local and hyperlocal expansion. For example, on trending topics a user can already down-select from WorldWide to San Francisco, but what about down-selecting further to neighborhood? What if, for example, a user wants to down-select to Marina to find a local hangout or browse which veggies are most popular at the Fort Mason Farmer’s Market?

This hyperlocal potential for Twitter has the ability to simultaneously reconnect us with our surroundings while keeping us connected online. In The Long Tail, Anderson (2) recognizes that “before the industrial revolution, most culture was local." Twitter, and a range of other platforms that couple unconstrained distribution with geotagging events and enterprises, may once again increase local culture. Paradoxically, perhaps the time period with no connectivity and the time period of ubiquitous connectivity might have more in common than the time period that separates them. Sure, Twitter can connect us to the protests in Egypt, a noble and important function, but it can also connect us to our own zip code in an innovative and powerful way.

Important

And now for that difficult word important. By most important, Dick Costolo is tying Twitter’s mission back to relevance, a seemingly subjective, individual thing.

Twitter’s approach has been multi-faceted: Limited character length and hashtags cultivate specificity. In some cases, Twitter is painting a more exact picture to advertisers than other platforms. For example, both Twitter and Facebook published their top trends of 2010. Contrast the Number 3 on the two lists: Inception (Twitter) and Movies (Facebook). This difference in specificity is important because people don’t generally market movies, they market a specific movie.  The granularity of Twitter’s trend mirrors marketers’ familiarity with maximizing SEM campaigns based on combinations of keywords. It’s not clear whether this discrepancy in specificity is due to differences in ecosystem, technology, or user base, but Twitter is currently providing more specific trends about the market.

In addition, the asymmetric (3) nature of following third parties conveys information in a unique way, and by orchestrating a platform that does just that, Twitter has altered the definition of relevance. A common tension often discussed by marketers is the tension between stated preferences from consumers and revealed preferences for the same consumers. As Henry Ford once famously noted, “If I'd asked customers what they wanted, they would have said ‘a faster horse.’” Thus, Twitter has tweaked our understanding of relevance by creating a semi-stated/semi-revealed category through the asymmetric follow.

Twitter’s new mission is not easy to achieve, but it is one that has great potential as a value-creating exercise for all of us. How they intend to implement the specific meaning of their mission and whether they take advantage of its full potential is yet to be seen.

(1) Anderson, C., & Wolff, M. (2010, September). The Web is Dead. Wired.  Retrieved January 27, 2010, from http://www.wired.com/magazine/2010/08/ff_webrip/all/1
(2) Anderson, C. (2006). The Long Tail. New York: Hyperion. (Buy this awesome book here: http://www.amazon.com/Long-Tail-Revised-Updated-Business/dp/1401309666/ref=sr_1_1?ie=UTF8&qid=1296168694&sr=8-1)
(3) I’m not aware of an exhaustive list of people who have written or spoken about this quality, but I know that Tim O'Reilly has mentioned it (http://radar.oreilly.com/2009/05/goodreads-vs-twitter-asymmetric-follow.html/), and John Battelle has also made similar points on his blog (http://battellemedia.com/).
(4) Portions of this post were sourced from my other writings posted here: http://www.quora.com/Will-Twitter-be-relevant-in-5-years

I’ve been using some new productivity tools lately that I’m very excited about: Remember the Milk (RTM) and Evernote (EN).  They are described below, but I wanted to first mention one commonality between them that I expect to spread from these products to other products and hopefully to most email we send.  

As emails arrive in our inbox, we only have a few signals as to their importance: sender (boss versus Netflix), time (0300 versus 1000 email from boss), and subject line (Urgent: On fire versus Enter Chance to Win a Flowbee).  However, all of these are decreasing in their abilities to help us prioritize, and we need more productivity tools to counter their decline.

If memory serves, when I started using email, I felt the subject line was my friend.  I thought a carefully crafted subject line would induce the appropriate, timely response I desired.  Clearly, people are so inundated with emails today that the subject line, and I would argue the other signals like time and sender, are becoming less relevant. 

Both RTM and EN allow users to add tasks or notes via email.  Additionally, they both utilize syntax in the subject line to categorize, prioritize, and file the contents of the email.  For example, if I want send myself a reminder to take out the trash tonight at home with a high priority, I would send this subject line to my RTM email: Take out Trash today #errand @home !1.  RTM converts this into a task on my to-do list with the appropriate attributes. 

This innovation is important for at least two reasons.  First, it signals the death of the subject line as content summary.  Shortly, subject lines won’t be used at all to summarize content but only to prioritize content.  Second, I think this pattern is a signal from the marketplace showing what many of us have known and experienced for several years now: email is now a hindrance to productivity.  I would suggest that our productivity plotted against volume of email looks something like the Laffer curve:

Most of us are well past the point of equilibrium on this graph, and we’re busy sorting, organizing, and sometimes replying to emails.  And, while I do think RTM and EN are providing a genuinely good prioritizing and organizing tool, it is just a Band-Aid.  There is only really one cure for this productivity decline: resource constraints. 

The only resource constraint currently on pruning our email accounts is our time.  It’s not infinite and hopefully we’re not all ignoring our opportunity costs either.  Currently, the cost of production and distribution of email is simply too small, and the only way to change this is to impose some constraints.  The system needs more boundaries to move the productivity curve back to equilibrium. 

A terrific experiment to perform would be to constrain an individual inbox to a limited, discrete number of emails per days, perhaps 30.  After that, each message would be bounced back to the sender with a message, perhaps it would like this:

“I am allowed to send and receive 30 emails per day.  I have exceeded that allotment and now must spend my day productively creating or consuming analysis with the rest of my team, who also now have time to talk about it.  If it’s that important, please feel free to call me.  Otherwise, hope we can connect tomorrow.”

This sounds crazy, right?  You couldn’t possibly only send and receive 30 emails a day?!?!?  The implicit assumption you are making when you reply to that incremental email is that your incremental time is worthless.  We are all neglecting to account for the opportunity cost of attending to our email, and we need to make a collective decision to artificially constrain the system.  It’s the only way to bend the productivity curve back in a meaningful way. 

I think a strong argument can be made for a flexible constraint  that bends given certain criteria like time of year (month), day of the week, etc.  In fact, perhaps this is an even better system because it would reject a certain number of emails per hour (per minute, God help you).  Additionally, maybe you could have a Favorite Five whose emails are always delivered to your inbox despite any outside conditions.  But the take away message is the same.  The marginal cost of production and distribution of an email is essentially zero now , and that cost must increase to rebalance asynchronous communication as medium for increased productivity. 

And now for a look at those productivity tools:

RTM: Cloud to-do list

Pros: iPhone App, syntax-centered sorting, cross-platform synchronization

Cons: Web interface

The iPhone app is really top notch,  allowing you to view by list, priority, location.  The Smart Add syntax, to add to-dos via email, is fairly intuitive.  For example, you can geotag tasks by marking them @Home or @Work in the subject line (assuming these are preset locations).  Other attributes like priority, list, time interval, and repetition are also available through  Smart Add (http://www.rememberthemilk.com/services/email/).  You can also add tasks via Twitter if you DM @RTM. 

I also like that I can sync folders across different platform, e.g. Google calendar and Outlook.  I can sync my tasks with Google tasks; checking them off in one place eliminates them from my to-do list.  Furthermore, you can selectively sync certain folders.  I do just that with my #Work folder between RTM and my work Outlook.  The web interface is my only real issue with this product.

Evernote:   Cloud catch-all

Pros: iPhone & iPad apps, desktop app, syntax-centered sorting, ability to email notes

Cons: no to-do list function

I have no idea what a day without Evernote looks like.  Where would I write down my latest thoughts?  Where would I store the return addresses from the folks who sent us Holiday cards?  Where would I keep my favorite quotes?  Evernote to the rescue.

EN supports Notebooks and Tags.  These functions are very helpful if you want to place two projects in the same, e.g. Work, but keep them separate for quick filling and searching.  Evernote supports snapshots (good for business cards) and voice memos.  Finally, they have this great ladder function on the iPhone that lets you quickly scroll up and down your different

They have some of the same great email smart add functions of RTM (although different syntax): http://blog.evernote.com/2010/03/16/emailing-into-evernote-just-got-better/.  Again, you can have much of the same functionality from Twitter by DMing @MyEN.

The web interface is better than RTM but still not nearly as good as it should be.  It is unclear to me why EN doesn’t have better to-do list support.  You can make items into to-dos, but it cumbersome and not easy to sort and use.