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Promoted Tweets – How Twitter Will Monetize

May 5, 2010

Since it’s launch in 2007, the big question for Twitter executives has always been, “but how are you planning to make MONEY?” Even after Twitter closed a massive 100 million dollar round of funding in September of 2009 putting their valuation at one billion dollars, this question has always been top of mind for all the companies that access their API (application programming interface, for you non-developers), investors, media and everyday twitter users. Whenever the word advertising enters a popular product’s vocabulary – whether it’s Hulu, Facebook or your favorite blog – there is a collective groan across the blogosphere. Which is why Twitter execs claim they took so long to release their “Twitter Ecosystem Monetization Platform” in order to ensure that this new offering doesn’t disrupt the natural flow of how Twitter has worked up to this point. Enter, “Promoted Tweets” a service first talked about at Ad Age New York and Twitter’s first annual Chirp Conference in San Francisco last month.

So what does this mean for you? Promoted tweets will start appearing when you conduct a Twitter search and eventually move to your personal stream, as well as the Twitter clients that you know and love such as Seesmic or Tweetdeck. A participating company can purchase a particular keyword and their sponsored tweet will appear at the top of that search noting it is both a promoted tweet and will appear a different color when you move the cursor over it. Companies including Starbucks, Virgin America and Bravo have already signed on to the new advertising program so don’t be surprised if their promoted tweets pop up in your search soon!  While I haven’t heard of any users seeing this new ad platform in the wild quite yet, you can see below what we can expect a few months down the line:

What makes this cost model a little different from traditional online advertising is what Twitter is calling “resonance” whereby the tweets that resonate with users will continue to stay in search streams and those that don’t will be removed. That means that companies will only pay for ads that are successful and will also learn very quickly what users like and what they don’t. Pretty crafty, huh?

If you want to learn more, I found this video of Twitter COO Dick Costolo talking to Peter Kafka and this article in Fast Company particularly useful.

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