July 15th, 2011

Google+Gaga = Tweet Deal

The Wall Street Journal

For Google, Twitter and Facebook it may be time for Star Wars.

Publicity-hungry celebrities are a driving force behind social media, especially on Twitter, where the top tweeters include Lady Gaga with nearly 12 million followers, Justin Bieber with 11 million, and Kim Kardashian with eight million. Indeed, a rush of celebrities signing on to Twitter in early 2009 corresponds to the period when the site’s U.S. traffic exploded, according to comScore data.

Yet today they receive no direct compensation for the content they place on Twitter or Facebook, where Lady Gaga has accumulated more than 40 million fans. That provides an opening that Google would be smart to exploit.

Given recently launched Google+, with over 10 million users, still is small compared with Twitter or Facebook, it might seem a tough sell to attract stars to the platform. Even though the other two don’t pay, their gigantic base of users gives celebrities a convenient and powerful way to promote themselves to their fans.

Google+ could try to lure them with money. If not direct payments, then perhaps by offering celebrities a cut of the advertising revenue that their Google+ profile pages generate. Google has used similar tactics before. For instance, it offers a generous cut of ad revenue to other search engines that display its search results. It does the same for publishers on its Blogger platform and sites across the Internet that put AdSense ads on their pages, not to mention some creators of YouTube videos.

Twitter theoretically could take similar steps one day by, for instance, sharing ad revenue with celebrities. Its ad-sales business still is developing, however. Since last October, the company has been testing putting advertisers’ tweets into users’ Twitter feeds, but has yet to roll it out. One issue: Such ads could prove intrusive. A better idea might be to work with celebrities so they tweet advertisements directly to followers. That should make ads less intrusive, more like product placement in TV shows than commercial breaks. Links sent by celebrities enjoy far higher click rates than other forms of online advertising, according to Bitly, a data-research firm.

Facebook, meanwhile, tries to prevent celebrities from endorsing products and services on their Facebook profiles. Nor does it share any of the revenue generated from ads on its pages. That leaves an opening for Google+.

Celebrities won’t up and leave Facebook, of course. With 750 million active users, the site is too huge to ignore. But they could start to devote more time to other platforms, reducing Facebook’s growth rate. That would be bad news for Facebook investors, who hope its impressive growth will result in a huge valuation when the company eventually goes public.

As the social-media battle heats up, stars should expect the combatants to show them the money.

Read more: http://online.wsj.com/article/SB10001424052702304203304576446084269052592.html?mod=WSJ_hps_sections_tech


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