How Twitter Will Destroy Google

In February, I predicted that Twitter's data would become so valuable to the likes of Amazon.com (Nasdaq: AMZN  ) , Netflix (Nasdaq: NFLX  ) , and Sirius XM Radio (Nasdaq: SIRI  ) as to warrant a $1 billion valuation.

In March, my friend Rick Munarriz predicted that Google (Nasdaq: GOOG  ) would buy Twitter outright. He saw The Big G creating AdSense streams that would flow through the Twitterverse, monetizing hiccups of data that Wall Street saw as mostly worthless.

Fast-forward a few months. Google and Twitter have discussed a deal, and investors now value the microblogger at $1 billion. I suppose that's the good news. But neither Rick nor I had this story exactly right; we still don't know why investors chose to pay so much for a slice of Twitter. But we do know that advertising is part of the plan.

On Friday, Twitter Chief Operating Officer Dick Costolo told the audience at a TechCrunch event that the microblogger is already making more than $4 million per year and that its long-absent business model is taking shape.

"It will be fascinating. Non-traditional. And people will love it ... It's going to be really cool," TechCrunch reports Costolo as saying.

How to out-ad Google
Blogger Robert Scoble has a theory for what this fascinating approach might be, and it's a doozy. Specifically, he says that Twitter could allow tweets to carry more metadata than they do now, and in the process create a gateway for contextual links.

Metadata is data about data. Twitter shows you metadata when it includes the date and time a tweet was sent, whether it was in reply to someone, and the method used (i.e., website, third-party software, phone, etc.).

"How about a Tweet that talks about a book. Someone could write 'Loved Trust Agents by Brogan.' That could link to Amazon so you could put it on your Kindle," Scoble writes at his blog. How? Via a tag that says "books," or some such. Importantly, such tags wouldn't alter a user's tweetstream in any way.

Scoble calls the idea a "SuperTweet," but I call it good business sense, and a serious threat to Google and its would-be digital advertising challengers, including Microsoft (Nasdaq: MSFT  ) and Yahoo! (Nasdaq: YHOO  ) .

But I've had my say. Now it's your turn. How much would a contextual ad strategy from Twitter hurt Google and its peers? Please vote in the poll below. You can also sound off in the comments box at the bottom.

Amazon and Netflix are Motley Fool Stock Advisor selections. Google is a Motley Fool Rule Breakers recommendation. Microsoft is a Motley Fool Inside Value pick. Motley Fool Options has recommended a diagonal call on Microsoft. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers owned shares of Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy is starting a second career as a pro thumb wrestler.


Read/Post Comments (11) | Recommend This Article (8)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 23, 2009, at 12:20 PM, PSU69 wrote:

    I believe GOOG has a global power that is not easily or quickly hurt by Twit and their ADD/HD Twitters.

  • Report this Comment On November 23, 2009, at 12:20 PM, TMFTheDoctor wrote:

    The trouble is that people need search but they don't need to tweet. Twitter's data can be monetized nicely if you can keep people using it, but in its present form, it's too minimalist to have the popularity of Facebook or another successful social networking site. Facebook only caught on because it started with college kids and it had more to offer than MySpace, so once all the college kids were talking about it, they offered it to high schoolers and finally "normal" people (adults) were let in, and they naturally jumped at the chance to spy on their kids under the auspices of "networking". Twitter is trying to work in reverse. This is just anecdotal but almost the only people I know using Twitter are business people trying to network and get in on the ground floor of whatever Twitter ends up being, and all the college kids I know either don't even know what Twitter is or they think it's ridiculous. That could all change of course, but I really don't see Twitter gaining enough popularity to grow. People already have Facebook for status updates and links.

  • Report this Comment On November 23, 2009, at 12:26 PM, SeekTheFire wrote:

    Ads served via Twitter could be a challenge to Google. The big question for me is how will users respond? Will they actually be interested in these ads and click on them to see what the people they follow are promoting? Or will they feel that these people they followed thinking they were getting authentic thoughts are selling them out?

    This is the big question for me. I'll be waiting to see what the popular response is. Could Twitter be a disruption that one sees? Or Twitter be a fading memory 5 years from now.

    I'm leaning toward fading memory, cautiously.

  • Report this Comment On November 23, 2009, at 3:05 PM, paulmartin42 wrote:

    Times have changed, there may be 81 detergents but most only use one or the other. Bing has cleverly evolved so that I start with it as a newspaper front but usually I sit in gmail and search from there. Yes, if I want realtime search I may go to Twitter but often its with a push from someone off my Google Reader feed.

    To build a relationship you might use various comms media so the question is what is part of that dialogue stream worth. Purchase decisions are complex and the internet is all the time grabbing a bigger slice of that dashboard; Google to me seems to be growing in influence faster than facebook, but maybe my age mitigates against the latter as I am a silver surfer. Twitter though always looks the same to me. In actual Politics its usually a two horse race though sometimes the riders may vary due to geography - soap is the same the world over but economies of scale means that there is a big gap between number 1&2 and the rest.

  • Report this Comment On November 24, 2009, at 5:05 AM, SIRIDoom wrote:

    Man,

    You SIRI worshipers need a new religion.

    SIRI is a dead stock until the rev-split...

    Go bash Mel Carmacrook

  • Report this Comment On November 24, 2009, at 6:15 AM, meiroy wrote:

    Twitter is not going to destroy Google. If anything, if Twitter will piss Google off Google will destroy it by starting their own idea, just better and for free. GOOG definitely something to hold on to.

  • Report this Comment On November 24, 2009, at 6:40 AM, meiroy wrote:

    Twitter is not going to destroy Google. If anything, if Twitter will piss Google off Google will destroy it by starting their own idea, just better and for free. GOOG definitely something to hold on to.

  • Report this Comment On November 24, 2009, at 10:33 AM, dedmunds wrote:

    SIRI CEO MEL SAID!!!

    NO REVERSE SPLIT!!!

    BUY BUY BUY!!!

  • Report this Comment On November 24, 2009, at 10:34 AM, dedmunds wrote:

    Hey SiriDoom, I think if anyone worships Sirius its you.Admit it, Sirius haunts your life everyday & night.Your whole life revolves around Sirius.Face it Sirius will haunt you FOREVER, HA HA HA

  • Report this Comment On November 24, 2009, at 8:37 PM, dedmunds wrote:

    SIRI,

    The bottom line:

    Cash flow is up enormously, The company recently projected cash flow (adjusted for unusual charges) of more than $400 million this year, compared with a loss of $136 million in 2008.

  • Report this Comment On December 03, 2009, at 10:18 AM, spr0949 wrote:

    MotleyFool and TheStreet have been bashing Sirius for months. Now there is some really positive big news that could well be the first page of an new book in the broadcast world. The potential for Sirius to go global is brought up by Mel in this article. Why aren't you reporting on that?

    http://www.reuters.com/article/newsOne/idUSTRE5AT56720091130

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