Twitter’s Revolutionary New Revenue Model is Revealed… Recycle Other Companies’ Revenue Models

After much anticipation over the last couple of years, Twitter is finally announcing some money-making plans Tuesday morning, and they may disappoint industry watchers who were expecting some strategies as innovative as Twitter itself. As the New York Times is reporting tonight, the company’s ad program, called Promoted Tweets, “will show up when Twitter users search for keywords that the advertisers have bought to link to their ads,” a la sponsored links at Google. 

The idea is to enable businesses to stay visible amidst the torrent of tweets published every day. The expectation, too, is that by getting real estate above the fray, advertisers can counter any disparaging tweets about their products or services with a positive sentiment about their businesses.

Until last week, the user-generated review site Yelp similarly allowed its advertisers to post one “positive” review atop everything else that was written about their store or service. Yelp dropped the practice after the company was struck by a class action lawsuit brought by small business owners who claim they were unfairly punished for not advertising.

Going forward, reports the Times, Twitter also plans to “show promoted posts in the stream of Twitter posts, based on how relevant they might be to a particular user.” If people aren’t clicking on or discussing the post, Twitter will stop showing it. “That means that the [advertiser] will not have to pay for it, and users will not see ads they do not find useful,” said Twitter’s chief operating officer, Dick Costolo, to the newspaper. 

The practice is very much akin to one that news aggregator Digg adopted earlier this year — though Digg’s promoted posts are designed to look like article links and it’s not clear that Twitter will work with advertisers on creating conversational-sounding tweets.

Essentially advertorials, Digg’s promoted posts are also performance-based and cost advertisers more money or less, depending on how long they last in Digg’s system before getting voted out. “The audience then doesn’t have to see what they don’t like, and advertisers don’t have to pay for something that isn’t performing well,” Digg’s former chief strategy officer, Mike Maser, told me in early February. (Maser has since joined AOL as the head of marketing for its consumer applications.)

Starbucks, Best Buy, and Virgin America will be among Twitter’s first Promoted Tweets advertisers.

Twitter wasn’t expected to announce its new advertising plans until Wednesday, when its San Francisco-based developers’ conference, Chirp, gets underway. The company may have rushed along those plans after serial entrepreneur Bill Gross unveiled his latest project earlier today: TweetUp, a startup that also intends to make money by inviting Twitter users to bid on keywords to give their posts top ranking.

1 Comment

  • I think it’s finally time that Twitter grew up and made some changes to adapt to their huge growth. It seems that for much of their life, Twitter has been playing catch-up, trying to keep their heads above water as the site grew in leaps and bounds. During this time they made very few actual enhancements, beyond stability, and left the features and business aspect up to the 3rd party developers. Now that they are acquiring strategic companies, rolling out their ad platform, and potentially changing their feed timeline it feels they are being more proactive about their future growth.

    But clearly the biggest news here is their advertising scheme. They really need it to work in order to justify their outrageous valuations. I’ve put together a rundown of the ad program and whether the experts think it will work:

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