The annals of tech history over the past decade are littered with abortive social start-ups that went nowhere, so App.net might sink without trace. But it has reached its funding targets, and if the paid subscription model starts working for social networks as it promises to do for digital news sites, investors could start to flee sites that adhere to the ad-supported approach.
App.net essentially does the same thing as Twitter, but users pay for membership. That’s in contrast to Twitter and Facebook, which depend on ads to survive.
They are missing out on crucial revenue opportunities, though, because both are sitting on a goldmine of data, but have yet to make use of it in a meaningful way. Their problem is that they know user trust will suffer if they start selling people’s personal information to advertisers, so they need to come up with creative ways of using the data they hold to help advertisers reach their target audiences.
The trouble is that there isn’t much to indicate that the ad formats they offer work particularly well. US car maker General Motors made the high-profile move of pulling its advertising from Facebook, complaining that it couldn’t advertise effectively on the platform. And Facebook has also just announced a disappointing first set of financial results since a disastrous stock market floatation.
Both Twitter and Facebook have focused their propositions to businesses on their advertising and branded content opportunities. But both should also be doing a better job of selling insight on a wider scale than an individual company’s ads or pages.
The volume of data passing through their sites each day – in the form of various messages and interactions – provides a stream of information that could be invaluable for identifying consumer trends around the world. From a data privacy point of view, it should also be perfectly possible to provide this service at a level that doesn’t compromise the identities of individuals, but instead gives virtually endless segmentations that marketers would be interested in.
The glut of social media surveys during the Olympics have shown that there is great appetite from the public, the media and brands alike to understand what people are doing and saying on Twitter and Facebook. At the moment, it’s independent app developers and other third parties that are plugging into their data and reaping the rewards.
Social networks could be competing with the biggest market research companies, but as Facebook’s plunging share price shows, they don’t have all the time in the world to work this out.