Twitter Looks to Monetize Location, But Is It Cart-Before-Horse?

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Screen Shot 2013-06-24 at 6.46.02 PMA few days after Twitter acquired local discovery app, Spindle, last week, news surfaced that the microblogging service was developing a long-awaited geo-targeting product for brands. The developments mark the latest episode in an ongoing saga, in which the two largest social networks — Twitter and Facebook — have briefly flirted with local before pulling back to recalibrate. A hyperlocal ad product is welcome news to advertisers, but Twitter needs to sure it does not neglect the users’ side of the equation.

For a company that pitches itself as being the pulse of the Internet, it’s surprising that Twitter has taken so long to add even the most rudimentary features to help both brands and users to filter the network by location. In the wake of the Boston bombings, for instance, I found myself wading through a number of unpolished third-party clients to discover tweets from users like Foursquare CEO Dennis Crowley who chronicled the aftermath from the scene.

However, the challenge for Twitter is, with the exception of rare episodes like the Boston bombings, most users do not come to the platform looking for local information. It’s less that Twitter is incapable of becoming a local medium, and more that the company has done very little to make the platform specifically valuable for local discovery and content creation.

In a recent study, a team of data scientists at University of Illinois at Urbana-Champaign analyzed over 1.5 billion tweets over the course 39 days to better understand the role of location on Twitter. The study, which took place in May, found that only a fraction (3%) of tweets included geolocation information, and a small contingent of users (less than 1%) accounted for the lion’s share (65%) of the georeferenced tweets.

Of the users who do utilize Twitter’s geotagging features, there’s little evidence that they interact more frequently with nearby users. In fact, the study found that the average distance between a user who sent a tweet and another user who retweeted it (or a “retweet pairing”) was 759 miles. That number decreases for “retweet pairings” that share between 5-9 interactions (likely friends), and then increases again for users who connect more than nine times, which the authors attribute to connections with celebrities and other public figures.

The articles and stories, which users embed in their tweets, tell a similar story. Working with a smaller, randomly selected sample, the researchers found that a little over a quarter of links included in tweets were to stories about the same city the user was located. At the same time, 46% of the stories linked to in a tweet reference events over 600 miles away.

“[The data] indicate that not only do users not preference communicating with users physically near them from those far away, but they discuss nearby and distant events at equal levels as well,” the authors concluded. “There appears to be only weak geographic affinity in communicative link formation in that users retweet and reference users far away nearly as often as they do those physically proximate to them. This suggests that geography may play an even lesser role in social media than previously thought.”

However, to conclude that there’s something intrinsic in Twitter’s platform that precludes it from becoming a hub of local activity overlooks a more pressing lesson for the company: local engagement, and subsequently local monetization, is not just “turned on.” These are developed over time through compelling consumer applications and services that create a clear framework for why and how a user shares his or her location with a service. Without that framework, Twitter lacks the contextual indicators — say, a user searching for tweets about an event nearby — that are critical to making mobile-local advertising work.

Twitter’s and Facebook’s reluctance to commit to a local strategy has left the door open for vertical players like Foursquare and NextDoor, but it has also kept a big portion of mobile spend out of the reach of hyperlocal vendors. eMarketer estimates that Facebook and Twitter will generate more than $1.1 billion in mobile revenue and account for nearly one of every six dollars spent in mobile advertising domestically this year. That spending will be critical in helping buoy a crowded and fiercely competitive mobile-local technology ecosystem.

Steven Jacobs is Street Fight’s deputy editor.