Social media platforms have become honeypots for advertisers across the globe as more people are using social media nowadays than ever. Ads are being shoved into the faces of users while various social media platforms are accused of using the sensitive data of the users. Facebook has been one of the prime suspects in this regard. But despite the accusations and outrage from various entities regarding the data manipulation and leakage, the current digital advertising framework is not being replaced by any of the major social media platforms as more and more money is flowing in owing to these ads. Various social media platforms are earning large revenues due to these ads and just around the corner lies the quarterly revenue report of one of the biggest social media platforms out there, Twitter.
Steady Earning Expectations
Speculations are floating around regarding whether Twitter will be able to show an increase in its overall revenue as the platform has been employing the digital advertising framework at its core. Twitter has not been as big as Facebook in the digital advertisement arena but it has been quite resilient in its overall performance in the past as the company’s net income has remained positive for four quarters straight.
Because Facebook uses more data information of user’s activity across the internet, it is better able to optimize itself for digital advertisement. This does not seem to be the case for Twitter. It remains to be seen whether the CEO of Twitter Jack Dorsey is able to take the company from where it is now to something that is more profitable than all of its competitors. One thing that Twitter probably needs to look at in order to make itself more profitable is ‘tokenization’. This claim also does not seem too ambitious as just recently Jack Dorsey revealed his pro-bitcoin stance to the world. In a tweet, Jack said:
I only have bitcoin https://t.co/C24xNJxuFB
— jack (@jack) February 5, 2019
The world of blockchain is developing at a very rapid pace revamping various frameworks across the globe. We are seeing various projects using token economics to build an economic model free from the need of the age-old digital advertising framework. One of the prime example in this regard is the blockchain-based ad-free browser, Brave. It uses the Basic Attention Token (BAT) to maintain its economic model. Its model allows for advertisers, publishers and users to work in a cleverly designed economic model free from the middlemen ad exchanges where even the users get rewards for participating. Now if Twitter decides to use tokenization any time soon, here is how it can change the platform.
Twitter can look at the model developed by Brave and incorporate something like it in its own framework so that the users of the platforms can get rewards for their participation. This can actually help Twitter get more and more participation for new users as rewards can be a very powerful incentive for the users to participate more in the network. More participation, more attention and hence more growth. The value of the ‘Twitter Token’ then gets dependent on its utility. Token holders in the network might use it for promoting their own tweet, or profile. On the other hand, if the users want to cash out their tokens, advertisers can buy from them in order to promote their ads on the platform. A decentralized network will be put in place enabling everyone participating in the network to use the ‘Twitter Token’ for their own benefit.
The quarterly earning result of Twitter might prove to be very rewarding for the company but they will be based on the traditional advertisement framework. If the company needs to outgrow and outperform its competitors in the game, the test of tokenization might prove to be very valuable and even more profitable than the current framework. Using blockchain, the issue of data privacy can also be kept in check.
It all seems to be dependent on the fact that if Twitter chooses tokenization to earn a net profit and whether it can develop a token economic model that makes it more profitable than it is right now. A model where the advertisers, publishers and the users are all in perfect harmony getting the best outcomes for themselves. But more importantly, should Twitter choose to tokenize its platform? There already are projects like Peepeth that present forward social media platforms to the world based on decentralization and token economics. But as of yet, none of them have proved to be truly successful. Should Twitter choose to opt tokenization as it already has a pretty stable user-base? We are traversing ‘the grey area’ here. It might even be a ‘make or break’ situation. Let’s see where the pro-bitcoin CEO of the platform takes the ship from here on.