Twitter Reveals Business Model

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.