Could Twitter Top Google?
Page 1 of 1
It's a radical notion, but to venture capitalist Fred Wilson, it's not an impossibility.
Speaking here at the 140 Characters conference today, Wilson discussed the ways in which Twitter could make money -- the same way that Google does, by driving traffic to Web sites.
"Google is powerful because it drives more traffic to more places than anywhere else," Wilson explained. "It is the source for 40 to 60 percent -- sometimes 80 percent -- of the traffic for sites I'm involved in."
But, he said, he's seen Twitter -- and another social site that's rocketing to fame, Facebook -- growing faster than Google.
"Six months ago, I started noticing Twitter in the referrals on my blog. We invest in about 25 Web sites and they are willing to share analytics with us on a confidential basis. I compared the trend line for Twitter and Facebook to Google," he said. "Google is still dominant but it is growing at only about 1 percent per month. Facebook and Twitter are coming on hard. Traffic is growing at 30 to 40 percent per month from a small base."
To Wilson, one of Twitter's early backers through Union Square Ventures, which he manages, that meteoric surge signals that the microblogging service has a real capability to make money by driving traffic.
"I'm an investor, but I'm not part of the management," Wilson said. "I'm not telegraphing anything; I'm just saying that it's obvious."
Despite making a splash when it emerged on the scene in 2006, Twitter, like Facebook, has struggled to find ways of attracting revenue. Despite several rounds of funding from high-profile investors including Union Square Vendors and Amazon CEO Jeff Bezos' personal investment company, the company's yet to develop a major revenue-generating offering.
But Wilson said he believes that Twitter's chief monetizable strength is in serving as the next stage of link-sharing.
In the past, people passed links to each other by e-mail. Now they use Facebook and Twitter and can spread links more effectively as a result. "E-mail passed links are one-to-one," he said. "Passed links on Facebook and Twitter scale more quickly."
"Facebook and Twitter may surpass Google," he added.
For e-commerce sites, Facebook and Twitter links are already more valuable than Google, according to Wilson.
[cob:Special_Report]"With e-commerce sites, we track another metric: conversion. Facebook and Twitter links deliver a better conversion rate than Google, which is not surprising if you think about it, because passed links are trusted links."
"Social media, especially systems like Facebook and Twitter that are good at driving traffic to the Internet, can deliver both money and social value," Wilson said.
"Facebook and Twitter need to spend cash on environmental remediation," Wilson said. "Spam will be on Twitter -- as it is in search -- but I am pretty confident that we'll handle it."
Wilson also said that since links on Facebook and Twitter come from friends, it should be easier to tell the difference between spam links and legitimate links than on other services.