This is a guest post by Nate Bagley.

One of the biggest problems currently facing many major Social Media sites (aside from trolls) is monetization. They thrive on VC and Angel funding while trying to find a way to be cash flow positive without turning off scores of users with intrusive ads. The most obvious example of this is the Twitters.

Twitter has yet to turn a profit, because they are avoiding “selling out” by diluting the value of their amazing service with a bombardment of ads or making their service subscription based. The simplicity of the site, however, doesn’t allow for many other monetization opportunities.

Unfortunately the data generated by Twitter isn’t valuable enough to be sold. Twitter Search allows companies to obtain a real-time sampling of the sentiment surrounding their brand. They get a taste as to what people are saying, but the information is rarely measurable or actionable. Data that can’t be measured is virtually useless.

The value of Facebook, on the other hand, is not only the sheer number of pre-pubescent digital farmers, mobsters and vampires using the site, but the amount of data they make freely accessible to advertisers. Facebook’s Ad Platform allows advertisers to target incredibly specific demographics, narrowing them down by age, location, gender, political affiliation, religion, relationships status and even entertainment preferences. They have taken hypertargeting to a whole new level, and have done so without infecting their website with an overabundance of crappy ads.

Location based sites like Foursquare and Gowalla are pushing the envelope of innovation and breaking new ground yet again. If they play their cards right, they can avoid the awkward financial walk of shame experienced by Twitter by offering an incredibly unique data set to their clients.

Foursquare is already pouncing on this opportunity by offering an analytics service to clients. Foursquare’s analytics platform includes information regarding where customers are coming from, peak hours of business, and the gender and frequency of returning customers.

In my opinion, Foursquare’s vision will have an industry-changing impact when they take their analytics service to the next level by implementing a survey feedback tool. Customer feedback surveys allow businesses to get detailed, real time information regarding quality and speed of service, cleanliness, friendliness of staff, etc.

Rewarding customers with a popsicle or a Dr. Pepper for helping improve the systems and service of their favorite establishments with real-time, relevant data helps build relationships, form a community and is essentially the future of social media. (You’d be surprised what some of us would do for a free Dr. Pepper.)

The Customer Feedback Managment Industry is a very fragmented, multi-billion dollar market. These location based sites are the future of the industry, and most people don’t have the foresight to see it. Before you know it, Social Media is going to dramatically shift hundreds of industries once again, and those who aren’t prepared are going to get left behind.

The fact of the matter is that Social Media is still in its youth. We are still learning how to measure its influence and impact. As the Social Media world evolves, and companies like Foursquare develop tools that provide real value, Social Media will become mainstream and essential to a business’ long term success.

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Nate Bagley is a Communications Major at Utah Valley University, and will be graduating April 2010. He has over 3 years of experience in SEO, PPC and Social Media marketing.

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Read more social media strategy on this social media blog.

Leave a Reply


  1. Definitely Nate. When you look at it, Twitter is going to have somewhat of a difficult time figure out what works, what will make them money, and doing it all without destroying their userbased. I definitely see how Facebook has done such a great job at getting advertisers and doing it all without cluttering the site.

    I didn’t know Foursquare had an analytics program. That’s very cool and I can easily see the huge benefit of a service like that for a retail based business, without even having one. And yes, we’ve still got a long ways to go in this whole social media game. We’re just now entering the first inning…will be interesting to see how the rest pans out!

  2. Question is do you think social media will mature to where people hope and believe it will?

    Or will SM fizzle out slowly like most online marketing?

    Is the touchy feely lets be friends grow a relationship way be something people will be ok with long term? As privacy becomes and more an issue for people, will they continue to share their world thru SM long term?

  3. Lindsay

    I found this very interesting. I did not realize that Twitter wasn’t turning a profit. It will be interesting to see how it evolves and what other types and measurements of social media will pop up.

  4. @John Paul
    I actually do believe that Social Media has been very consistent in its maturation over the years. It will most certainly not stay the same, but fizzling or disappearing would surprise me.

    People value a personal experience. They like to be treated like individuals. The concept of providing excellent service has existed for ages, and social media is really just another tool to help provide that experience as technology evolves.

    Keep an eye on the new trends. They may surprise you, but they also may help you understand your customers on a whole new level.

  5. I am with Nate.

    I am just about to launch a new digital agency in Australia with a big focus on social. I sold my web dev business last year and I have been beavering away on the plan for the new, social focus agency since then

    So, I obviously see a business opportunity, so I will have my fingers crossed that John’s question turns out to be prophetic.

    Having said all of that, my model is only part social. We are also going into semantics and we will still be focussed on web presences.

    So, a sole focus on the narrow bands of social networking and media might die out soon. But for the actual thing to go, I am going to bet on it thriving and consuming ever more eyeballs and time.

    And that, I think, is the real currency and I am sure that Twitter will get there in the end with some very big way to make serious money

    Jimi Bostock
    PUSH Agency
    Brisbane, Canberra, Sydney

  6. Social media has proved during the last years it only intends to evolve, and not fade out. Of course, it may change in time, as it is normal to happen, but there is no wasy online marketing – through its many forms, can actually disappear.

  7. Twitter actually turned a profit in 2009 : and many have already speculated that Twitter will launch an ad platform this year so I have no doubt that once Twitter figures out the advertising angle they will be a profitable company.

    Analytics within location aware applications such as Foursquare may one day prove to be a valuable information source for business but that day is far away as the number of people currently using these types of services is marginally low. I think it will be Facebook and their upcoming location service that may be the company that brings location to the masses.

  8. Social media may be in its youth but it is here to stay. Social media is a very powerful tool.
    David Plouffe’s,(President Barack Obama’s point man on social media) innovative strategy not only got Obama elected but also managed to raise the largest amount of campaign funding in election history.
    At the IMD OWP 2010 , David Plouffe will share his insights on the historic Obama campaign while framing it in the context of how Obama’s leadership is shaping the United States and the world today. Weaving in his own experience managing and leading the campaign that propelled Obama into the White House, Plouffe will share: the stories behind the campaign and current strategic issues facing the administration; the importance of strategy in managing campaigns, public policy initiatives and crises; how Obama is still garnering support from the movement created during the campaign.

  9. In response to John Paul Aguiar’s question, I don’t think that social media will die out. It has empowered and brought people together like no other technology could do. I do think that it may evolve, just like other technology has.

    I think that the monetization of social media is the holy grail. Some companies have done it well (eg. Facebook, Google). Social networks need to reach a certain level of adoption and users for any monetization to succeed.

    It will be interesting to see where Twitter goes.

  10. This is a nice and fresh departure from what the public perceives Twitter as. I appreciate the candid view of Nate Bagley.

    At the other side of the “evolving” spectrum mentioned above, lies a niche where analytics are being deeply and socially integrated. In a below the radar beta we have enabled the transport of 250K pieces of media into pure cyberspace, where opaque tracking pixels and AS3 code pick up geo and (social) network firing of embedded links with meta data. The method we deploy has (finally) ingrained dual redundancy which resolves any and all ambiguity of the the analytic itself. When you strip out the overall views versus events being fired manually by the user you see the impact or lack in your campaign. It simply works. The GAforFlash portion we use is a widely underutilized element which has not been modified one iota since it’s release in 08. Amazing.

    What does this really mean? The model rids the client of the monetization issue spoken about here by bringing the traffic to a conversion point where the consumer see no ads. The social media “object” was the ad itself which appears to the consumer directly in timelines on Facebook profiles and pages to garnering consumer interaction and insights from a robust back end. On the other hand, Twitter allows us to engage with the same objects (media) via a short link to the media raw form and to transport it into their own Facebook profile to share. SEE, there is a use for Twitter.

    I was driven to this post from a DM in Twitter from @SocialPros . Their Twitter profile had a dead link in it but I’m glad he steered me right anyway.

    Remember, social doesn’t work at all without all the behind the scenes tech people, tweaking and inventing. Look at the incredible opportunity it has presented everyone, and we all don’t have to be marketers to enjoy it.


    Stuart L
    (The url above is a client site)

  11. I think that Twitter is definitely on its way to becoming more profitable.

    It is just a matter of figuring out how Twitter users will respond to different advertising and marketing channels and building the right apps or adjusting their services to take advantage of these opportunities.

    Facebook’s advertising and marketing channels were not always this successful … and I think that Twitter is at the phase where, just like Facebook … it is building up to a profitable future!

  12. I think its difficult to get a gage from survey feedback, this usually represents only a small majority of people that use a product. Your right, figuring a way to monetize could make or break these social media sites in the future.

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