Twitter finally in the money with Google link

Biz Stone, a co-founder of Twitter, was in the audience at the launch this week of Google’s new weapon in the search engine wars.

He was looking remarkably cheerful, as well he might. The announcement of a stream of millions of Twitter updates in Google’s results pages marked the moment when the faddish micro-blogging site truly entered the mainstream and started to make real money.

Now Google’s millions of users can see a scroll of updates, many from Twitter, in their results pages when they do a search for a vast number of popular queries.

A search for “Tiger Woods” produces a page with a new “Latest Updates” box. In it there is a constantly refreshing and scrolling list of tweets, blog posts and news stories, all flowing on to the page in real-time within seconds of their publication to the web. Designarchives tweets: “Holiday shopping is officially in full swing, kinda like Tiger Woods was.”

While not everyone will want up-to-the-second delivery from the globe’s virtual water-cooler, Twitter’s partnership with Google, and a similar deal struck with Microsoft and its Bing search engine, give the three-year-old company a solid revenue stream.

The deals are each worth several million dollars a month to Twitter, industry insiders said. The cash marks the first tangible evidence that the service can make money after months of monetisation promises from Twitter executives.

Twitter has seen explosive growth in the past two years to more than 50 million users, driven in part by celebrity endorsements but also by the service’s ability to deliver breaking news, sometimes ahead of traditional media, such as the plane crash on the Hudson river in New York. The Treasury used the service this week to deliver summaries of the Pre-Budget Report as Alistair Darling was addressing the Commons.

But while Twitter has become established as a cultural phenomenon, critics have pointed to the lack of a business model and questioned its longevity. Analysts said that Google’s exposure of tweets to a wider audience — the search engine processes billions of search queries a day — will help the company to cement its position as a window into the world’s conversations.

Greg Sterling, analyst with Sterling Market Intelligence, said: “The value is the institutionalisation of Twitter that comes from the deal with Google. The inclusion in the search results will make it more visible.”

He said that Twitter was difficult for many people to get started on. “Twitter can seem ridiculous to those who are not using it to get commercial offers or information from sources that they value. There will be some education for parts of the market from this,” he added.

Twitter’s real-time insight into what people are discussing has huge value to marketeers and companies that want to reach consumers and understand how their brands are perceived, according to experts.

That potential has seen venture capitalists pile into the company. Twitter has gathered $100 million in funding to finance its operations, valuing the company at $1 billion.

The latest stakes were sold in October to three of Twitter’s existing investors — Benchmark Capital, Institutional Venture Partners and Spark Capital — and two new shareholders, Insight Venture Partners and T Rowe Price.

The cash has given Twitter breathing space. Executives have said they are in no hurry to introduce advertising to the site, which may put off users. They have also said they will remain independent despite rumours of overtures from Google and Microsoft. Last year they turned down a $500 million offer from Facebook.

Mr Stone said last month that 2010 would be Twitter’s “revenue year”. The company will capitalise on corporate use of the service by introducing fees on accounts primarily used for commercial purposes. A report from NeXt Up Research forecast that Twitter would have about $140 million in revenue a year by 2014. A new poll of 1,200 UK businesses using Twitter found that 22 per cent would be prepared to pay for additional services. Nearly half the companies surveyed by Accredited Supplier said Twitter would be the world’s largest social media property by 2020.

Computer maker Dell said it had pulled in more than $6.5 million from its (free) Twitter accounts.

Tweets will push up profits: Analysis by Murad Ahmed

Google’s desire to obtain real-time information — such as the deluge of messages that come out of services such as Twitter every second — is in keeping with its mission: “To organise the world’s information and make it universally accessible and useful.”

These tweets are a cash cow waiting to be milked. Google executives have never been shy in explaining why they want more and more information to be searchable. The better and more relevant data that they can offer its users, the more advertising they can sell next to these search results.

This billion-dollar revenue stream is the driving force behind almost everything Google does. Whether that is Street View, which gives people a pedestrian-eye view of roads around the country, or Google Books, an attempt to scan and digitise millions of texts — the aim is simple: make Google the indispensable holder of the world’s information.

Realising this, Microsoft, with its Bing search engine, and this week, Yahoo, have also announced similar deals to contain real-time search information within search results.

But why is real-time search valuable? Because it is instant. Whereas news articles take hours and days to prepare, and blog posts take minutes, tweets and micro-blogs can be tapped out and published in seconds.

Biz Stone, co-founder of Twitter, once explained that he first saw the power of the service when the first he heard about an earthquake a few miles away was through people tweeting about it. He felt the tremors a few minutes later.

Some worry that people will tweet less, or more privately, now that these messages are just a Google search away from being discovered.

Yet analysts said there is little evidence of that happening. Twitter has thrived because of its openness, just like other social networks such as Facebook and MySpace. People seem happy to trade in privacy to be part of these communities. Tweets will continue to grow. Google, Microsoft and others believe that their profits can follow suit. Twitter finally in the money with Google link