Twitter : Monetization Challenge

Table of Content

1. What is twitter

2. Litmus test

— Retention

— Deeper Engagment

— Willingness to pay

3. Substitute Price

4. Design Price

— Who to charge ?

— When to charge ?

— What to charge for ?

— How much to charge ?

— How to show pricing ?

What is Twitter:

Twitter is a real-time microblogging platform, publicly launched in July 2006. At launch, its defining features were the tight limits placed on each post, known as a tweet. Originally, users could only use 140 characters, although that was doubled to 280 in 2017 and now planning to increase it even more.

It is a digital center of the world.

First, anything happens in the real world, then on Twitter and sometimes vice-versa.

This platform is the first source of authentication.

When something is happens on Twitter, you take a screenshot of that tweet and share it on the rest of social media. It’s that powerful.

No wonder, the President of the USA got banned on the platform, recently bought by a meme lover billionaire who is planning to reverse ban the president.

Yea, there is drama too.

Step 1 | Litmus test

You need to check three core signals to arrive at monetization readiness.

1. Retention

If the curve flattens out or has a smile curve, it’s a positive signal to monetization readiness.

Based on the above facts and definitions about Twitter we can conclude that twitter’s actual and expected natural from the company is daily.

Most users visit Twitter multiple times a day to stay informed.

The problem is that it takes quite some time for new users to identify the core value prop of twitter because of which almost 25% churned in the first week itself, which turns into 30% within a month.

After 1st month if we consider, a 10% MoM churned rate(90% retained), then the M12 retention rate will be 25%.

Key statistics

• Twitter generated $3.7 billion in revenue in 2020, an 8.8 percent increase year-on-year
• 86 percent of Twitter’s revenue came from advertising in 2020
• Twitter posted a net loss of $1.1 billion in 2020, which was the company’s first annual loss since 2017
• Twitter has 186 million daily active users
• Twitter’s MAUs are reportedly at between 350 and 400 million

2. Deeper engagement

→ Divide your existing customers into Causal, Core & power users.

→ Does more than 50% of your customers are in core & power user segments? If it is case #2, you are good to go.

3. Willingness to pay

Create a list of 30 customers who fall into causal/ core/ power users.

Few of the questions I asked during user interview :-

→ How much will you pay for the product?

→ Will you pay for this one time or recurring?

→ What would make you pay more?

Casual users might not be the target to run monetization campaigns as they are yet to experience the core value prop of the product.

Ideally, we should try to turn them into the core, make them experience core value prop and then run a monetization campaign.

Now, Twitter is an infotainment platform and by the nature of the platform, it should be a monthly subscription model as a platform, we still have some space left to cover and turn them into power users.

Power users are those who come to the platform for work, social media managers, influencers, founders or anyone.

They know the core value prop, understand how it works and trust also. So, for this type of user, one-time setup costs or annual fees along with add-ons will work best as they don’t have to be reminded amount of subscription fees.

Maybe not anymore

Yup, not anymore

If this actually happens, it would be a landmark decision considering all other social media platforms currently allow any users or organizations to have their own accounts/ pages free of cost. Twitter is the one place where organizations, Government officials and offices have been making important announcements and expressing their opinions. Monetizing that could have some unprecedented effects which will only come to light once this is implemented.

Step 2 | Substitute pricing

We need to check three core signals to arrive at monetization readiness :-

1. What is the core problem your product solves?

2. What is the other way to fulfill the same use case?

Once this comparison is created, you should validate what users are buying into. Uber, they are buying into the value of time (Uber is faster than other methods), the flexibility of use & recurring costs (Uber is pay-as-you-go).

The primary reasons why users keep coming back to Twitter are

1. To stay Informed
2. To share opinion
3. Work
4. Entertainment

To stay informed is the biggest reason among all 4.

The reason why this option is a major solution for users is that Twitter offers ‘Authenticity of the content’ along with a community-like feel for users.

Features that validate these reasons:-

1. Thread-like comment structure: When a user adds a comment on a post, it starts a thread in the comment itself. Later on, the author or other visitors of that post can add some value to the comment by giving a like or adding another comment to expand the thread even further.
2. Bookmark: With all the social media apps and their short video-type content, Twitter is fighting a different war. While other platforms are lowering the attention span of users, twitter’s algorithm still prefers text-based content keeping users’ attention span high. Now, you might not be in a state to absorb text-based content at some moment. So, you can bookmark a post and revisit that.
3. Short character limit: An image can tell a story of a thousand words, but when you are on Twitter you are supposed to complete that in 280 characters which used to be 140. This short character limit forces users to be precise and clear with whatever they want to express, making the content easy to remember and understand.
4. The relatively high ratio of genuine accounts:

but finally bought 100% stake in Twitter for approx $44B, around $54.20/share, and all of it in cash.

I mean it’s just crazy !!!

Step 3 | Design pricing

Who to charge?

Step 1: Create an RFM framework.

You will first start charging for Loyal and champion users.

First test the elasticity of churn vs revenue gain for these two buckets of users.

Recency score ->

1- Last visit was 30 days or before

5 — The last visit was a couple of hours back

Frequency ->

1 — Once a month

5- Multiple times a day

When to charge?

→ Charge the customer when you have created the right perceived value. Perceived value currency differs by product.

→ There are four types of perceived value viz Money, Time, Dopamine & Efficiency.

→ The point where perceived value >> perceived price, your monetization should kick in.

Users visit Twitter for authentic information and mark something which they find useful along with a couple of other features such as Like, retweet, quote retweet, comment, share, message, follow, create a list, join communities, join live spaces and more.

Each feature gives a different value, so we need to categorize them first.

• Increase Efficiency:- Help users use the platform better and find core value quicker. Eg. — Ad-free content
• Money:- Help users save money, earn money or get more value for the money spent. Eg:- Targeted ads, promoted tweets, tip jar, ticketed space, super follow
• Dopamine:- Give users some social proof of the actions they are doing. Eg: Twitter blue, super follow, and ability to host ticketed space.
• Time:- Help users help time for the actions they are doing inside the product or outside the product. Eg: The dedicated bookmark button, shows tweets for specific topics from the home screens(similar to youtube).

Events to show monetization prompt:

1. Jar tip: When the author reaches 1000 likes or 200 retweets in the last 5 posts within 2 weeks.
2. Promote tweets: When a user with less than 1000 followers tweets at least 1 tweet every day in the last 7 days. Show them to monetize tweets to increase reach.
3. Ticketed Space: When the user hosts space and it has more than 500 audiences listening to the event for more than 60% of the duration. If this happens a minimum of twice in the last 2 weeks.
4. Super follow: If Jar tip and Ticketed spaces, both conditions are met.
5. Dedicated bookmark: If the user bookmarks at least 2 posts every day.

What to charge for?

There are broadly four ways you can charge for.

→ Time: Curefit will charge you a monthly subscription.

→ Output: Swiggy charges a delivery fee per order.

→ Access: AWS charges for a dedicated server even if you don’t use it.

→ Shareability: Notion charges for a team-sharing feature.

“What to charge for” should keep count of the core actions.

Twitter is used as a microblogging platform and to connect with a large community.

People love text-based authentic content.

For the content creator audience, the core value is the ability to tweet. Some smaller actions can be host spaces and write threads.

• Time: Can be billed monthly or annually for the general use cases.
• Output: Event-based usage is currently done for ads and promoted tweets.
• Access: Access to ticketed space and tweets under super follow users. DM to users’ non-following users. Can not attend more than 5 spaces within a week. Can not create/follow more than 5 lists and can not join more than 2 communities.
• Shareability: Can not do retweet/quote retweet more than 10 times a day. Can not save more than 5 bookmarks a day.

How much to charge?

Create a perceived value vs perceived value math for your own product.

You will have to create multiple experiments to figure our at what point you achieve max {pricing X number of paying customers}

You would also account for the substitute method (Uber vs metro example), the competitive advantage while constantly raising the prices.

Regular Users:

Perceived Value: Get access to authentic content, mostly texts from subject matter experts from various topics.

This is the value users get by accessing different platforms such as Linkedin (for connections) + The ken/Instagram/news platform (for content) + Reddit (for community)

Accessing the premium value of these platforms will cost around 1500/month or 20,000/year.

Perceived Price: ₹49–199/month or ₹499–1999/year

So, the perceived value becomes 10X of the perceived price. This makes shorter sales cycle.

Marketing

Perceived Value: Twitter is an extremely effective free advertising tool, with millions of advertising audiences. It offers options of paid advertising opportunities that allow you to target your followers, automate your bids, and promote business. These ads, when used correctly, allow brands to gain visibility and attract more followers, click-throughs, and app downloads.

There are 3 products available on Twitter:

• Promoted Accounts — To increase your follower base. It works on a Cost per Follow(CPF) model.
• Promoted Tweets — This is to promote your content to your target audience at large. This is the most scalable property and works on a cost-per-engagement model(CPE).
• Promoted Trend — This is a 24-hour reservation buy. The trend (#tag) would be visible to the users who log on to Twitter on that particular day.

Apart from some other values are monthly reports, app installation, website conversion, awareness ads and much more.

Perceived Price:

• Website visits campaign: $1.68 — $10.00
• Followers campaigns: $2.50 — $3.50
• Tweet engagements campaigns: $1.50 — $2.50
• App installs or re-engagement campaigns: $1.95 — $3.25
• Awareness campaigns: $6.00 — $8.00

How to show pricing?

Individual Users

Teams