And Twitter is "right on the cutting edge of gathering demographics to develop targeted advertising and content," said Jimmy Schaeffler, Chairman and Chief Service Office of The Carmel Group.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio, agreed that the feature offers some evidence that Twitter management is pointed in a positive direction.

"We own Twitter for my charitable trust," Cramer said. "It's a small position given how hard it is to have conviction based on the earnings. But I do like the upcoming changes and I wish they would get on with a CEO."

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Although 85% of Twitter's revenue comes from ads on its site (advertisers pay for how many times their ads are re-tweeted), the rest comes from data mining. Twitter creates something called a "firehose" which allows companies to analyze the roughly 500 million tweets per day that Twitter generates. And not only will advertisers learn what you like, but can determine if you are "willing to take the next step and donate to a cause," according to Schaeffler.

Schaeffler is so convinced that this will be lucrative for Twitter, he gives the company twelve months to "turn this part of their business into something remarkable."

But the feature is not without its detractors, many of whom fear that data-mining from members can be a double-edged sword, alienating users who are targeted for products. While this is no different than similar tactics employed by Google and Facebook, the immediate nature of Twitter, and its appeal as a microblogging site could turn-off users that now have to wade through an ocean of ads.

It could also turn off users that not only have to provide personal information, but divulge their political affiliations, leaving them vulnerable to solicitations for more money.

Which is exactly the kind of information advertisers and fund-raising organizations are willing to pay for. Marketing executives and consumer research outfits want to know "how passionate individuals are and will this specific individual take the next step and donate to our cause?" added Schaeffler.

According to Patrick Moorhead, President and principal analyst at Moor Insights and Strategy, this is also a way "for Twitter to get users comfortable conducting commerce and collecting credit card information."

While there is no immediate monetary reward for Twitter since Square gets the 1.9% transaction fee, the potential revenue the information could generate, not to mention the appeal to new members, could be a turning point for Twitter. If nothing else, it shows that the company is looking in the right direction for organic growth.

 

 

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