How Do Businesses Make Money With Twitter?

BOSTON (TheStreet) — Remember when you first heard the word "Twitter?" Most likely, you wrote the whole thing off as a passing fad. Only the most desperate narcissists would want to narrate their life in real time, right?

Millions of tweets later, Twitter has become a cornerstone of the social-media landscape, along with LinkedIn and Facebook. According to the new conventional wisdom, these sites are critical in attracting new and future customers. Big businesses have spent the past year test-driving numerous new strategies, from Procter & Gamble (Stock Quote: PG) offering discounts to Old Spice fans on Facebook, to McDonald's (Stock Quote: MCD) providing quick customer feedback via Twitter.

A few specialty businesses do depend on mobile updates to draw most of their customers, such as the gourmet-food carts in Manhattan that post their upcoming locations on Twitter. But for the vast majority of businesses, a Twitter or Facebook presence doesn't translate into huge profits. To be used effectively, these sites should be thought of as networking resources, not a path toward direct sales.

Ivan Misner, author of "Networking Like a Pro" (Entrepreneur Press) and founder of the business-networking organization BNI, says online venues are a form of marketing that's still emerging. "People don't even know where to start," he says. "They're asking themselves, 'Where do I go, and what do I do there?' "

Whether it's online or in-person networking, the first step is visibility, Misner says. People have to know who you are and what you do. It's easy enough to become visible on Facebook or Twitter; both sites make it quick and easy to sign up.

Once you're visible online, the next step is to establish credibility. "People have to not only know what you do, they have to trust your work," Misner says. The final step is profitability, which comes when other people trust your work enough to refer you. And no one is going to refer you solely based on your Facebook updates.

"Networking is more about farming than hunting," Misner says. "It takes a long time, and it's often harder to measure results in the short term."