This is a bombshell for developers and users alike.

Twitter is famous for having taken a feature (status update) and made it into a product. As a result it has always relied on 3rd party applications to fill the huge and varied holes within the service. Need to share photos? Use Twitpic. Need to manage multiple accounts? Use TweetDeck. Need to shorten URLs? Try bit.ly. These applications are critical to how we use Twitter. In fact, there’s a good argument to say that “Twitter”, as the customer knows it, is rather a suite of 3rd party applications (based on an open platform), rather than a single, giant, social network.

So what does it mean?

Well, the risk for Twitter is that it might just be biting the very hands that have fed it through that last few years of phenomenal growth. Who can honestly say they would have continued to use Twitter beyond their own personal experimental phase were it not for user-friendly applications like TweetDeck? Sure, Twitter wants to “fill it’s own holes” from now on – but to oust the incumbent apps in the minds of their users, Twitter’s own-brand apps will have to be great. But the real risk here is that they will both hamper growth in Twitter usage AND encourage the development of new or rival micro-blogging platforms, such as Google’s Jaiku.

For Twitter users there is a risk in the short/medium term that some of our favourite applications may be blocked from using the Twitter API without their in-house replacements being ready. Longer term this might be seen as the point at which Twitter closed it’s doors to creativity and began prioritising it’s bottom line over its users. That might be a little harsh – in fact it’s probably as damning a statement as it’s possible to make about a social network – but today definitely marks the end of the road for some great small companies and that’s never a good thing.

So what are “promoted tweets”? Here’s how Advertising Age described the scheme: “Initially, advertisers will bid on keywords on a cost-per-thousand basis, but Twitter is developing a performance model that could be the basis for pricing based on a metric called “resonance” — impact judged on how much a tweet is passed around, marked as a favorite or how often a user clicks through a posted link. Ads that perform well will stay in the system; ads that don’t rise above the resonance score of a typical tweet from a marketer will fall out.”

Got that? So eventually popular adverts will keep getting shared around, while unpopular adverts will sink and be cleared from the system. In those terms the end solution sounds rather clever. But in the meantime, we’re stuck with a classic CPM model where Twitter gets paid based on how many adverts it can show us.  The question is: how many of these Ad-Tweets will there be? One in one hundred? One in fifty? That might be OK, but what about one in twenty? Or one in ten?

I’m all for Twitter making money, but why risk implementing a clumsy system before releasing a clever one? Seems a bit of a rush job to me. Anyway, let’s see.

The problem here is the same one companies have on Facebook (which doesn’t allow “corporate” accounts).  Social media happens between people, not companies-and-companies or companies-and-people. It’s a people thing and it doesn’t work well within clearly defined systems and processes. So the question is: how should companies manage social media interaction to ensure that protocols are followed and the process is achieving the desired results?

The answer is simple. They shouldn’t try. Social media doesn’t work within systems because, to state the obvious, companies can only control one small part of the process. For example, they cannot control:

1. Where the interaction occurs ( it needs to follow the conversation wherever it is)
2. When the interaction occurs (customers talk out of office hours)
3. How the interaction occurs (it might be limited to 140 characters, or not)
4. The duration of the interaction (the customer might continue it beyond the point of “resolution”)
5. Who the interaction occurs with (it might be completely public, involving customers and non-customers)

Now, in fairness,  “corporate” Twitter accounts are producing some very satisfactory results for customers. But very few companies are harnessing the true value of social media for customer services. If companies could harness the loyalty and passion of their staff to spread goodwill online, without over-regulating it (i.e. using a fair degree of trust) and without imposing restrictions on who, where, how, why and when –  I believe the benefits would greatly outweigh the risks.

Some large companies, such as Zippo’s - which encourages all staff to engage with customers on Twitter – are ably demonstrating this, but these tend to be isolated examples. Interestingly, the companies leading the way in this area are smaller ones that are quick on their feet and both trust and value their employees enough to empower them as advocates. This is where the real value of customer- oriented social media engagement lies.

I read an article in The Guardian by John Naughton some time back, where he asked the question – “how would you design the world’s first global encyclopedia?”  The traditional corporate response was to assemble an editorial board of the world’s foremost thinkers who would then solicit and assemble high-quality articles from respected authorities. But, of course, we now know, through wikipedia, that you can do this more effectively using social media by sticking up a wiki and letting the world fill in the gaps. Less structure, fewer rules, more trust. That’s how we work best together.

We’ll be discussing this and more at Monitoring Social Media 09, 17th Nov. London