When retailer Dick's Sporting Goods wanted to find out why consumers were coming into its stores but not buying anything, it tapped Twitter's firehose.
The same torrent of data has also been used to let supermarket chains assess the demand for barbecue equipment on a coming weekend, figure out where the next factory is going to be built and evaluate the mood of voters in Egypt. While many businesses have profited from using Twitter's torrent of raw data, the biggest beneficiary is probably Twitter itself, which has used its data business to promote its primary one — advertising — to the Fortune 1000.
"We believe fundamentally that advertisers spend money on stuff they understand," says Rob Bailey, CEO of DataSift, one of the few companies with direct access to Twitter's firehose. "I am absolutely amazed in the sea change around the understanding of Twitter at the corporate level." Bailey says he believes that understanding is a result of Twitter's decision to make such data available.
Chris Moody, CEO of DataSift competitor Gnip, agreed with the sentiment. "Twitter has done a spectacular job getting mindshare from major brands," he says. Moody says that's largely because Twitter has made its data an industry standard for social listening.
See also: 8 Marketers Doing Big Data Right
Twitter began giving access to its data to third parties in 2010. Since then Twitter has become ubiquitous in Corporate America. An August study by SimplyMeasured found that 97% of the top 100 brands (as chosen by Interbrand) had a Twitter presence, giving it equal footing with Facebook. Bailey says that over 90% and "close to 100%" of the Fortune 500 analyze Twitter's data to look for consumer trends.
The two uses of Twitter — as a source of information about what consumers are saying about your company and as a platform for communicating with those customers — are self-reinforcing. "It's very easy for a marketer to see where the conversation is happening online and that gives them visibility about where their ad dollars should go," says Kristin Muhlner, CEO of newBrandAnalytics. "This helps provide some visibility."
The combination has worked well for Twitter. In a recent filing with the Securities and Exchange Commission, the company disclosed that it made $317 million in revenues in 2012. Data licensing accounted for about $47.5 million of that, or roughly 15%.
Muhlner says that some 65% to 70% of all brand mentions her company gathers come from Twitter. That said, the quality of the data isn't always stellar, she says. "It's difficult to say a lot in a tweet," she says. "People don't tend to be expressive. They might say 'I can't wait to get my chicken sandwich from Chick-fil-A,' but they won't mention the dirty bathrooms ." Reviews on Yelp and TripAdvisor are better, Muhlner says. While a tweet might reveal 1.5 insights on average, a review might be good for 10, she says.
Patrick Mahoney was co-founder of Collecta, one of Twitter's initial, ill-fated partners for the firehose. Mahoney said that the data often wasn't all that useful for marketers. "We wanted to provide situational awareness on breaking topics, and for that, Twitter was very helpful (as were Wordpress, NOAA, Stats, and other API sources)," he wrote in an email to Mashable. "Unfortunately for us, outside Wall Street, real-timeliness of information is far more elastic, and the demand far lower."
Despite those limitations, firms like Muhlners have yielded actionable insights for clients. Dick's, for instance, can find out why those customers are leaving without purchasing anything. If the staff is rude, newBrandAnalytics can use geofencing to isolate which stores are having those issues and then address the issue.
That said, Twitter's status as the gold standard of customer data is far from solidified. Bailey, for instance, is a big fan of Tumblr, another partner whose firehose provides actionable data for youth-skewing brands and the auto market. (Tumblr has a "large and robust army of auto enthusiasts," he says.)
The biggest potential competitor is Facebook. The private nature of most Facebook communication has prevented Facebook from sharing it with marketers. However last month, the company began providing interaction data to four TV networks — ABC, NBC, Fox and CBS plus a handful of other partners — detailing how TV shows are being received. For her part, Muhlner has tapped some publicly available Facebook data. "It's pretty noisy data," she says, "but there are still some good insights there."
Image: Mashable composite. Flickr, Pastalane