Twitter launches Ads, New Business Model


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twitter_revenue1.gifSomething we've all been eagerly (maybe too eagerly) waiting for has finally happened. Twitter has finally launched Promoted Tweets which is a Google AdWords like program to further monetize its business. On first blush, I like the promoted tweets program unlike the third party sponsored tweets programs that I've blogged about in the past. But first let me explain how it works.

Companies can buy search result terms so that their chosen tweets appear at the top of the page when a user searches for that keyword. So for example, if I were to buy the keyword "television" every time a user searched for television, he'd see my ad. My ad wouldn't be like a Google Adwords customized advertisement though. It would be a previous tweet of mine that I would have selected to appear as the ad for that search term. The promoted tweet would be clearly labeled as a promoted one and wouldn't get lost in the stream as time passes. It'll stay at the top of the page. 

Some other factors to keep in mind about promoted tweets:
  • Only one promoted tweet will be displayed per search results page
  • These tweets will have the regular features (reply, re-tweeting & favoriting)
  • Promoted tweets that aren't resonating with users will disappear
  • Resonance will be measured by actions taken by users (re-tweeting etc)
  • The promoted tweets will only appear in search results for now
  • In the longer term they may appear in the stream and in third party apps
  • Starting out advertisers will bid on keywords on a CPM basis
  • Over time, bidding may also account for the resonance in the pricing too

5 Reasons Why I Like Promoted Tweets
1. Twitter is using organic tweets as the ads. That's a novel concept and very much aligned with the ethos of twitter. I like that. The ads will be more accepted by the community too as a result.

2. Twitter is launching this only with the search results pages. That's good. Twitter wants to see whether the community accepts the ad model before expanding it. That's a sensible way to launch the program.

3. Twitter recognizes that ads are an irritant and are restricting the number of promoted tweets to one per keyword term. That's good too though it'll block out small advertisers for whom the keywords will get expensive really quickly. 

4. Twitter is trying to use the promoted tweets to drive further engagement on its own platform in a similar fashion to how the engagement ads help Facebook increase traffic to the Facebook pages. Smart strategy and it makes total sense.

5. Twitter is introducing this as a limited beta for a few select advertisers (our client Best Buy is one of them). Rather than role it out en masse the way Google Buzz launched, Twitter is being more careful. Sensible again.

So it looks like Twitter is going to have three sources of revenue after all - the promoted tweets program, professional accounts for business users and a data fee from search engines indexing tweets. Twitter certainly seems to be make the right choices and certainly in the case of Promoted Tweets I strongly suspect advertisers will embrace the program in droves.

Note: Best Buy, a Razorfish client, is one of the launch partners and we were peripherally involved in the testing of the new advertising platform. Image above is courtesy http://geeky-gadgets.com

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Follow me on Twitter (@shivsingh) for more insights on digital strategy and social media.

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