Over a year ago, when we were first putting together PingMe, a system not entirely unlike Twitter, we had a pretty good idea what the real potential was for a revenue model and how valuable it could be.

A few weeks back we posited these thoughts in public because the discussion of Twitter's likely potential for revenue keeps coming up in the blogosphere and it seems like everyone is missing the obvious: sticking small, meme-sized ads in the tweets themselves, based on context and relationships, and exploiting the nearly unbounded impression space. Nice to see somebody agrees with us about the context part of things, even though I think ReadWriteWeb is getting the means wrong.

I'm pretty sure that if Twitter started sending direct advertisements to their users, as opposed to embedded ones, they'd chase their users away to the clone services that are starting to emerge and which will mature. I don't think people will pay to subscribe to Twitter to escape the ads; when a service has been free for almost two years (a long time on the Internet), that kind of conversion is probably not in the cards (although not impossible). The potential revenue in just embedding ads is so high that I doubt they'd risk angering their user base with direct ads.

On top of that, it was a few months ago that some Tweets were arriving on my phone with an embedded ad for Twitter itself at the end of it, signaling, IMHO, that that would be the ad space in the future.

I should mention that since we started using our direct-embedding method in PingMe messages to briefly mention our other products and brands, we've yet to have any complaints from our users. You can't ask for better than that (well, aside from goal conversions).

Over the past few months we've been getting a lot of great feed back from users of Tempo, we've been squashing bugs, and we've been working really hard on a number of new features and service integrations. We've also been continuously striving to streamline the interface and make it even easier to use.

This Sunday, May 11th, from 9pm to 12am Eastern, Tempo will be offline while we perform the latest batch of updates -- this is a big one! Stay tuned...

P.S. During the same time period, PingMe will be unavailable for system maintenance -- no pings will be sent and the web interface will be unavailable.

Pay close attention – we’re about to hand over an idea that could make Twitter…(drum roll, please)…ONE MILLION DOLLARS.

We saw this today on Tech Crunch (which has since been refuted):

Occasional ads in the Twitter timeline … seems like the only real way to monetize Twitter, aside for premium subscriptions.

It’s an interesting idea. We have long thought that the destined revenue model for Twitter is a new means of advertising where miniature ads will be injected at the end of Tweets.

Your messages on Twitter are restricted to 140 characters. This leaves 20 extra spaces, possibly a lot more with short tweets, before hitting the SMS limit of 160 characters. That reserve is perfect for advertising. We’ve been calling it meme-vertising and we’ve been doing it with our own service PingMe for well over a year – we use it to advertise our own services.

Here’s how it works – we reserve 30 characters in every message that goes out, just enough space to jam a quick meme or ad in there. Anything goes, from Keep Time with http://KeepTempo.com to “Real men of genius,” if Budweiser decided to buy a block of impressions.

Unconvinced? Twitter’s ad space would be virtually unbounded because the impressions are based on relationships, not page views. Consider that when Michael Arrington sends out one tweet alone, it could provide 13,104 impressions. In the end someone has to pay for a service, especially given the usurious cost of sending and receiving SMS messaging, and nothing stands a better chance of getting Twitter into the black than this virtually umlimited adspace that they possess.

We suggested last week that there’s also money to be made offering business-level service and there is certainly revenue potential with putting ads in the timeline. Yet, I would wager that many Twitter users access the service with a third-party API client and wouldn’t see them. I certainly don’t think that Twitter would abuse their relationship with users by sending pure spam-tweets to your phone or device. We frankly can’t see a better way for Twitter to make loads of money than to use the enormous advertising potential already present in its tweets.

Is it intrusive? To a degree. Although, in the year that we’ve been running PingMe we haven’t had a single complaint, and I think you can see here how it can be done without being an eye-sore:

Note: we haven’t yet taken on third-party advertisers for PingMe, but at some point we’d like to. Let us know if you’re a local bar that might like to have “1/2 price drnx at Moe’s 6-8” show up at the end of a reminder about “Happy hour with Frank tonight at 5.”

We’re on Twitter, too, follow us at: @billymeltdown and @ocskills

We’ve seen mention on a few sites about the potential for Twitter to monetizing their service by charging businesses for mobile interfaces. The case study they quote is a mobile interface for
Harvest.

We think that it’s great that more companies are exploring mobile interfaces like this. Our own small business time tracking system Tempo also
excels at
mobile entry, letting our users record time through Twitter, iPhone, SMS, mobile web, and even desktop mail (much of this functionality is borrowed from
PingMe, a mobile app from birth). While the idea of Twitter as a mobile command line is not new, its always great to see more tools embrace the idea.

So, with a constantly expanding list of services like
Twittercal,
Jott,
Harvest ,
Timer,
RTM,
PingMe,
and
Tempo
all using Twitter, it would seem reasonable for them to monetize these relationships.

That said, even as a company that loves Twitter and already uses it in our apps, the big concern is reliability. Tweets get dropped or delayed more often than we’d like to admit, default rate limits can cause issues, web service calls can cause delays, and the APIs don’t provide scalability to really large numbers of messages. When the service is free these aren’t show stoppers. If charges are involved it’s a different ball-game.

If Twitter were to pursue the monetization strategy the right move would be to provide a dedicated business service. Include guaranteed delivery, improved message processing integrations, dedicated API servers, and quicker processing. This would make the offering very competitive with all of the existing SMS and Text-to-email gateways on the market.

Now that would be worth paying for.

Trying to explain a new technological concept to the uninitiatied, especially something involving social networking, can sometimes be an up-hill task, but it’s a challenge I generally relish.

I came across Melissa Chang’s article on Twitter via the excellent Y Combinator Hacker News. In broad broad summary, Melissa feels Twitter will remain an obscure service in the cultural mainstream (for the time being) due to difficulties in explaining the concept and use-cases.

So I’d just like to address a couple of points Melissa made:

1. It’s hard to explain.

I find it’s very easy to explain, especially to non-nerds, if you tell them “it’s like a slow chat or IM with all your friends.” Elaborating, “your friends’ messages come and go as presence or conversations, and you can reply, start your own, or let them pass by and keep working.” Recent explanations like that have worked for me. Or you tell your neophyte buddy, “it lets you send an IM or text to all your friends at once and they can reply and send you messages, on the internet or on your phone.”

There are lots of neat things you can do with Twitter, so just pick your favorite and say it out loud.

I’m not trying to be a total Twitter advocate here, but I don’t think it’s that hard for people to get, especially for anybody under 25 right now.

2. There is no “key selling proposition.”

See above. There are lots of neat things you can do with Twitter. Just tell your friend what you use it for, in simple terms. “I use it to tell everyone about my cat,” or “I use it to stay in touch with friends during the workday.”

3. People sign up and then leave.

Well, welcome to the internet. But the crux of Melissa’s problem here was not really understanding what to post about. Which I can’t entirely blame her when she first signed up. I think everyone gets that moment at first of, “so… now what? do I put that I’m hungry? I have no friends yet, this is interesting.”

It’s the same with any social network, actually. And I think there’s a huge population of people right now who get that and have no problem sticking around and making use of such tools, linking up with their meat-space friends.

4. The people who don’t use Twitter don’t understand the language of it.

Maybe it’s because I had some experience with IRC back when the crust of the Internet started to cool at the end of the 90’s, but I totally got what the ‘@’ symbol meant and I think most of the young’ins out there get it, too. It’s pretty obvious that those are screen names when you are looking at someone’s timeline (twitter page); people are having conversations.