Twitter Reveals Business Model
"Promoted Tweets" will bring ads into the stream of real-time conversation.
Erica Naone 04/13/2010
- 1 Comment
At long last, Twitter has announced its business model. The company has grown explosively since its launch in 2007 and there has been intense speculation about how it could make its popular service profitable. The plan is to use an advertising model that it calls "Promoted Tweets."
In the first phase of the plan, Promoted Tweets will appear at the top of Twitter search results. They'll be just like regular tweets, meaning that users can reply, retweet them, or favorite them. But they will be clearly labeled as advertising.
Twitter co-founder Biz Stone wrote in a blog post that these aren't just a repeat of Google's sponsored search results:
There is one big difference between a Promoted Tweet and a regular Tweet. Promoted Tweets must meet a higher bar--they must resonate with users. That means if users don't interact with a Promoted Tweet to allow us to know that the Promoted Tweet is resonating with them, such as replying to it, favoriting it, or Retweeting it, the Promoted Tweet will disappear.
In the future, Twitter plans to expand Promoted Tweets so that they will appear in users' timelines, "in a way that is useful to you." Before launching this phase of its business plan, Stone says, the company wants to have a better understanding of how users react to Promoted Tweets and their value for advertisers.
Advertisers who will be involved with Promoted Tweets at launch include Red Bull, Starbucks, Best Buy, and Virgin America.
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2 Comments
Twitter - Are they really ready for advertising?
Learning about Twitter finally making the decision to provide an advertising platform is actually exciting. I believe any company that consistently breaks its visitor record every month for several years needs to take advantage of any opportunities for revenue generation. But are they really ready yet? Twitter is #10 on Alexa in site visitation proving they have the numbers. But do they have the architecture and platform to capitalize off an advertising platform. There are a few things that I would look for if i were to advertise on the new Twitter advertising platform (apparently Red Bull, Starbucks, Best Buy, and Virgin America have done their due diligence).
Keyword Relevance
As an advertiser I would need to make sure I can target a specific market or niche. You might as well take your money and advertise on the t.v. and radio is you want to do shot gun "faith based" advertising. I want to know that my message is reaching the exact target. For example, I see a record label promoting a new or even well known artist with Twitter easily. Targeting keywords like Justin Bieber or Madonna. There are several advantages for this particular industry. However, it may not be a good marketing tool for the local frame making shop. Or not!
Localization
Once we address the ability to fine-tune our campaign to a specific keyword set and niche I would look for the ability to perform localized marketing. As mentioned previously the local frame making shop may not have the best opportunity for a decent ROI but perhaps Twitter has devised a way to focus on local advertising.
Traffic Monitoring
Once we set sail on our new Twitter advertising campaign it's time to monitor our efforts. I'm interested in seeing what type of data will be available with Twitter advertising.
CPC vs. CPM
Razorfish surveyed 1,006 U.S. consumers to explore digital habits. (Schmitt, Supe, and Lerch, 2008). Back then they found the following results for Twitter users. Now these results have probably improved with more users using Twitter more frequently over longer periods of time.
How often do you use Twitter?
71.90% - Never
14.83% - Once in a while
8.39% - Most of the time
4.88% - All the time
Hopefully the advertising platform is cost effective in which I don't pay for the 71% of the Twitter users they never or rarely login. I would look for CPM advertising or "Cost per impression" advertising as an option.
Well, I think Twitter will ultimately provide a good opportunity for advertisers to reach their desired advertising goals.
Damonic "DomCom" Robertson
DXIdesign.com - Web Smarter!
References
Schmitt, Supe, and Lerch, 2008. Meet the connected consumer.
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