Twitter announces advertising model

TAGS: Twitter

Earlier this week, Twitter officially declared the launch of a long awaited business model after several years of conjecture and uncertainty. So... what's it all about?

As many expected, Twitter announced that their business model is to generate revenue from a key phrase-based advertising model, similar to that which built Google into a billion-dollar phenomenon.

According to the New York Times, Twitter's new advertising offering (Promoted Tweets) will present ads that "show up when Twitter users search for keywords that the advertisers have bought to link to their ads".

It works like this:

When a Twitter user searches for a word that an advertiser has bought, a message will be displayed at the top of the results, even if it was written much earlier. Later, Twitter plans to show promoted posts in the stream of Twitter posts, based on how relevant they might be to a particular user.

For now, Twitter's ad-matching and pricing formula is a work in progress. The company will start by charging marketers per thousand impressions of their ads. Over time, it plans to move to a more complex model, charging based on how users interact with the messages.

It sounds like Twitter are planning a Google-esque Quality Score system too – Twitter said it will not show ads that don't receive a certain "resonance" score, based on factors like how many people clicked on or forwarded the ad.

Major brands apparently participating in the launch include Starbucks, Best Buy, Virgin America, Bravo, Red Bull, and Sony Pictures - all of which are active contributors on Twitter.

Twitter's CFO, Dick Costolo, told the New York Times: “The idea behind Promoted Tweets is that we want to enhance the communications that companies are already having with customers on Twitter.”

That’s a key point. It’s NOT going to be the next Google Adwords and it shouldn’t be thought of as such because searches on Twitter are less likely to have ‘intent’. It’s not comparable. Without a large number of intent-driven searches in worthwhile markets, Promoted Tweets isn’t going to compete with Google.

There’s undoubtedly a niche for Promoted Tweets though and it’ll be interesting to see how advertisers start to use the medium effectively.

Watch this space.
 

John Ryder is the Commercial Director at Silverbean. If you have any questions or would like to discuss how Silverbean can help you achieve your online marketing objectives through good usability; please contact John using one of the following.

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