Lessons in Managing Demand Not Predicting It
There is something about the Super Bowl that continues to linger, something about it, well, the commercials during it, that felt so transformational, so watershed. What makes it harder to put into words is that articulating this ecosystem shift means having to get off a bandwagon that felt so good – the let’s make fun of Twitter bandwagon. Twitter. Twitter. Twitter. Tweet. Tweet. Tweet. Fail Whale. Larry The Bird. We may not be Geek enough to fully embrace it, but they hit on something big, and more important than doing something right, the key accomplishment was not screwing up the momentum. That, as much as anything from a pure professional amazement and awe has me floored. The system is in so many ways so simple, so equally counterintuitive, limited, and yet addictive. It is also anything but what the original vision was. Long before the term pivot became cool, before lean startup was a mantra, and long before Twitter, they cracked the code and managed not to drown in the fire hose.
Recovering Twitter haters like me will note that in many ways that the product is still counterintuitive and something that we can still live without. But, instead of finding ways to bash them, the aforementioned tapping the vein and figuring out how to bottle the unexpected cultural revolution that has transpired since, makes the Twitter sum greater than the parts of its easy to pick on parts. The Super Bowl, though, that was a game changer, because the biggest winner was Twitter. It was a winner without even being a direct winner. Most of the commercials promoting Twitter didn’t even mention Twitter. They simply put a hashtag. It was simply implied that Twitter was the outlet. Thanks to Twitter, the “#” has a name, conference call instructions now make sense, and the “@” has a split personality.
Helping the “#” have a definition outside of “I can’t remember if it’s on the left or right side of the bottom part of the dial-pad” is nice, but what Twitter is doing to the global lexicon around @ is the difference between developing country and dominant super power. Just as commercials with “#” plus phrase indicate a conversation node on Twitter, the @ is starting to refer to the new email address. Historically, it was a great shorthand way of just saying or writing @. Now, we are reaching a point where if there is an @, it’s starting to be assumed that what follows is not a place or part of an email address but your handle. It’s amazing, and it’s being leveraged in very unexpected ways. Take a look at Science.Their corporate handles are their Twitter handles. It’s as though Twitter knew that by using @ before it’s handle it could challenge the inbox because it allows a person to have both a body of work and a way to be reached. It’s branding, ego, gamification, and short.
Twitter has now started to make money off this demand. Next week, we’ll talk more about their ad product, but in taking a cue from others, they decided not to start monetizing until they absolutely needed to. How did they know? I’ll hazard it went something like this. Scene: Mid-2010. The company has high overhead, lots of buzz, some internal issues, not as much direction as they’d like. They aren’t having trouble raising money, but as the valuation goes up with the burn rate, their ability to hold off from trying to make money in the ad-rich world of Google, and now Facebook, mounts. They know they have volume. They know that on a conservative revenue per thousand impressions they have a business, but they also know that if they unveil something that doesn’t work, it will do more harm than good. Making $10mm per year is nice, but they need to make ten times that out of the gate. So, what do they do? They don’t open up a product to the masses. They do figure out where marketplaces could exist without impacting the user experience, and then they go through a very thoughtful process (one smart person) on how to charge. Most importantly, they just give themselves time.
Had Twitter not given themselves time, not waiting until their ad product made sense, we would have a very different Twitter today. A healthy ad ecosystem only adds validity. In this case, they made sure they had enough big brands ready to spend whatever Twitter wanted to charge so long as it sounded reasonable. This was yet another genius moment from them. They took TV budgets by tying into TV budgets, but they actually took TV budgets by coming to terms with what they are – a new form of broadcast media. They got broadcast dollars and priced in a way that sounds not only justifiable but in the eyes of those spending, prudent. Add to everything else Twitter did by hearing better than others, an era of cost-per-engagement advertising, i.e., performance-based pricing for brands. All-in-all it really is amazing. Twitter will be first in many things, but their ability to listen and not step directly in the fire hose has placed them in first place.
