Twitter Boasts... And is somehow worth $1Billion?

The latest factoids from Twitter staff:

1. The average Twitter user has 126 followers;
2. 20% of its traffic comes through the Twitter website;
3. it doesn't make any money.

Near as I can tell, this is the greatest business plan in history. They overstate follower numbers (#1), they over-imply the promise of advertising value (#2), and they can't come up with a business plan to produce a revenue stream(#3).

All that adds up to a valuation, by an outside source, of $1 Billion. Anyone here remember the dot-com bust of 2000?

Breaking down the boast

I'll break this down one at a time.

#1 - Over-stated followers

A few spin doctors on the Twitter staff have released numbers to us stating that the average Twitter user has 126 followers. How many followers do you have?

Chances are the number is close to 6.

According to this fantastic little study, the top 10% of Twitter users have so many followers as to render the rest of us useless. The top 0.1% of Twitter users has some 18,000 followers. The top 10% has over 450.

Do the math - 0.1% of 54.7 million users (in August 2009) gives us 54,700 users with over 18,000 followers. I'm going to go out on a limb and say that these people are skewing the numbers.

After all, in order to get into this study, you must be deemed an "Active" user. The mind-boggling criteria to be deemed "Active" you might ask?

..."users with at least five followers, five friends, or five updates."

#2 - Over-Stated Advertising Potential

If 20% of traffic is going through the website, then 80% is not. That means 80% of all the traffic runs through a non-advertising portal such as a smart phone.

How long do you think it will take for the 20% to shrink to 0% once advertising pros start gumming up the Twitter website with banner ads?

Haven't you ever stopped to think why there aren't any ads on that site yet? Please...

#3 - It doesn't make any money

They don't make any money. This simple truth is why we know that Twitter has been valued at $1B. It's because they are running out of venture capital. Because they don't make any money.

Twitter is great

Please don't misinterpret my ramblings to say that Twitter isn't a fantastic social media tool. It is. In fact, it's the meaning of life for many a Twitter user and that must be worth something.

But let's not get carried away here...

Twitter Knows Where You Are!!!

It's true - Twitter knows right, exactly where you are. You Tweet, they jot down your location.

"Of course they know where I am."

You are using a computer or smartphone to update your Twitter account. It isn't terribly difficult to decipher some one's whereabouts when they connect to a website. A qualified application developer will either pull the information from your computer's IP address or from GPS/Geolocation data in your cell phone.

Who cares, right?

Well, according to a few techie-press sources we trust, they are starting to collect and save the data. The Twitter folks say they will only save the data for 14 days.

Regardless, saving data means it can be displayed. Or sold to the highest bidder. How much would you pay to know that a repeat customer just walked into your coffee shop?

Or better yet, how would you like to know that Bob Smith, a repeat customer, just walked into your coffee shop and he's aggravated with the long line at the counter?

The ultimate demographic data?

Think of the power of knowing some one's preferences AND their close proximity to your business. Specifically, your business in Minneapolis, Minnesota on the corner of 4th Ave. and 12th St.

"Hey Bob! Welcome! Say, sorry about the long line. How would you like a free coffee? Great!"

You just gained a very happy customer. Albeit Bob is probably freaking out about the Big Brother implications but it's a free coffee just the same.

He'll probably talk about both the free coffee and the Big Brother issues to his friends. They'll undoubtedly mention your store. And if Bob is like my friends, they will all go into that coffee shop, Twitter-phone in hand, Tweeting away about how great you are.

They're sold.

But it's scary just the same.

Bing takes search share from Google

Bing has started to take some search share from Google.

Yahoo has dropped from 20.1% in May to 19.3% in August. Google has dropped from a 65% share in May to 64.6% in August, which is only half of the market share loss experienced by Yahoo.

Microsoft, which started at an 8% share in May has increased to a 9.3% share in August according to the latest comScore search engine rankings.

The question remains to be seen if Bing's market share is from the advertising initiative and "I have to try it" factor, or if it's from actual customer satisfaction. If Bing's success is customer satisfaction then they will easily have a double digit share of the search market before the year is out. Satisfied customers tend to give great word of mouth advertising, which can only help Bing in the long run.

If Google continues to lose their market share at the same pace, while Bing grows at this pace, Bing should overcome Google around August of 2020. We'll be watching. (yes, we're aware this is faulty math)

Does domain age matter?

Within the last year Google has finally gone on record to comment on the significance of a domain name's age and how it affects rankings in search engines.

The most recent instance occurred when Matt Cutts addressed this in the GoogleWebmasterHelp YouTube channel back in May:



Cutts also provided a similar glimmer of insight earlier in the year when he said:

To the best of my knowledge, no search engine has ever confirmed that they use length-of-registration as a factor in scoring. If a company is asserting that as a fact, that would be troubling.

So, yes, we do have two recent statements wherein Google specifically touches on the issue of domain registration length and its effect on search engine rankings, but (un)surprisingly both of these responses are fairly ambiguous. He isn't specifically saying that a domain's age doesn't have an effect on search engine rankings, just that it doesn't matter all that much when you look at the big picture.

If we were to take Cutts' statements for what they are, then we can infer that a three month old domain won't have any significant or noticeable competitive handicap when compared to a one or even two-year-old domain. A number of people have come out of the woodwork to argue against this point, and we've even begun to see a number of registration companies and domain squatters who are more than happy to use a domain name's age as a selling point.

But for many of the people who have shown good returns on established domains, their sites are often tied to high-quality, well-written content, as well as established and strong in-bound links. Regardless of whether or not age plays a large role in Google's algorithm, it's very rare for a brand new domain to have all of these things associated with it at launch. It takes planning, follow-thru, and more importantly time, to pull all of these things together. So it should come as no surprise that a site that has been actively updated and maintained for a year or two would hold an advantage over a newly christened site; there just wasn't as much time or effort put into the new site.

None of the factors that go into SEO exist in a vacuum, and a good portion of optimizing a site well often involves seeing the forest for the trees. While many people within the industry can argue the merits of holding on to established domains, the focus should never be specifically centered on one aspect. Now that we have an official word on this matter, one would hope that the subject could be dropped in favor of techniques that speak more to the substantive long-term and short-term needs of a site.

CraigsList Makes Top-50 Retailer List

The cover story for the STORES.org Favorite 50 online retailers list sees an odd newcomer to the ranks of perennial favorites. We're used to seeing Wal-Mart, eBay and Best Buy at the top of the list but the big surprise is Craigslist debut at No. 25.

Is Craigslist a Retailer?

Interestingly enough, Craigslist's characterization as a retailer is a topic of contention among many retail gurus. The site isn't actually a point of purchase website as we would require of a true online retailer.

Regardless, the STORES list of Favorite 50 online retailers is based upon a a survey of 8,600 customers in June, 2009. The customer is always right!