Posted April 13, 2010 7:56 am by with 3 comments

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It has been a long awaited and long talked about prospect but it looks like Twitter is finally letting us all know at least one way that they plan to make money. To literally no one’s surprise it will be through ads that Twitter calls “Promoted Tweets”.

The New York Times reports

Twitter will unveil on Tuesday a much-anticipated plan for making money from advertising, finally answering the question of how the company expects to turn its exponential growth into revenue.

The advertising program, which Twitter calls Promoted Tweets, will show up when Twitter users search for keywords that the advertisers have bought to link to their ads. Later, Twitter plans to show promoted posts in the stream of Twitter posts, based on how relevant they might be to a particular user.

Twitter has had its feet to the fire for quite some time as to what they would do to mine their millions of users for the gold that they represent to advertisers. This program is the first phase of that process.

John Batelle offers some interesting insights into this big development. His reaction to the same quote from the NYT is

The news is not so much that Twitter will show sponsored tweets in search results – after all, we’re pretty used to that, thanks to AdWords. The real news is the second part: Twitter will include sponsored tweets in the “the stream of Twitter posts, based on how relevant they might be to a particular user.”

Regardless of where Twitter users consumer their Twitter feeds, the reality is this: Twitter’s new ad platform will mark the first time, ever, that users of the service will see a tweet from someone they have not explicitly decided to follow.

This will certainly attract every opinion from every person on the planet. Some will predict the demise of Twitter as a useful tool. Some will hail Twitter for finally wanting to be a real business. Others who are new to Twitter will not know that there ever was a time where Twitter was ad free. In other words, we are at the announcement stage of what is likely to become a long and closely monitored (meaning picked to shreds) process. To make the definitive statement on if this new platform will be the new AdWords is premature at best and foolish at worst.

As for my opinion. Well, I am not an influencer, per se, but I am a Twitter user. As a result I will be the target for these ads. As a result, my biggest question is can Twitter deliver on its desire to deliver the most relevant ad at the most appropriate time? Pretty simple. If I start to see ads for all kinds of junk with no apparent relevance to my Twitter use then I will be aggravated. Will it mean that I leave Twitter? Not likely. My hope is that they can do a better job than Facebook does and at least offer some variety of ads.

So let’s look at how these ads will work for now.

When a Twitter user searches for a word an advertiser bought, the promoted message will show up at the top of the results, even if it was written much earlier. The posts say they are promoted by the company in small type, and when someone rolls over a promoted post with a cursor, it turns yellow.

Note that for now these ads will appear following a Twitter search on the Twitter site. These two features alone will limit just who sees any ads from the onset.

Twitter will measure what it calls resonance, which takes into account nine factors, including the number of people who saw the post, the number of people who replied to it or passed it on to their followers, and the number of people who clicked on links.

If a post does not reach a certain resonance score, Twitter will no longer show it as a promoted post. That means that the company will not have to pay for it, and users will not see ads they do not find useful, Dick Costolo, Twitter’s Chief Operating Officer said

It’s when the ads move into a Twitter stream and reach third party apps that the real program will be unveiled.

In the next phase of Twitter’s revenue plan, it will show promoted posts in a user’s Twitter stream, even if a user did not perform a search and does not follow the advertiser.

For example, if someone has been following people who write about travel, they could see a promoted post from Virgin America on holiday fare discounts.

So sound off Marketing Pilgrim readers. Is the is the end of the Twitter world as we know it? Is this the day you have dreaded or the day you have waited for. If you are a Twitter user but not a potential advertiser I suspect you will have a much different view of this then just a pure marketer would. Let’s hear it.

  • The big question for advertisers is:

    1. Will those “sponsored posts” be retweetable? (I think they will.)
    2. Will it be based on impressions, PPC, or both?
    3. Will there be a flat cost per sponsored tweet, with unlimited impressions/clickthroughs available?

    If it is a cost per impression model, a ReTweet or two could absolutely kill an advertising budget, for very little ROI.
    .-= Kurt´s last blog ..Talking Tire Stocks – Dead in the Water or Major Recovery? =-.

    • If you ask me, if one of these sponsored tweets is actually good enough to get retweeted then it deserves to get those resulting extra impressions for free. After all I’m sure Twitter would be more keen on adverts that keep the conversation going and keeps their users happy while making them some revenue.

  • I think it’s finally time that Twitter grew up and made some changes to adapt to their huge growth. It seems that for much of their life, Twitter has been playing catch-up, trying to keep their heads above water as the site grew in leaps and bounds. During this time they made very few actual enhancements, beyond stability, and left the features and business aspect up to the 3rd party developers. Now that they are acquiring strategic companies, rolling out their ad platform, and potentially changing their feed timeline it feels they are being more proactive about their future growth.

    But clearly the biggest news here is their advertising scheme. They really need it to work in order to justify their outrageous valuations. I’ve put together a rundown of the ad program and whether the experts think it will work: