Twitter plans to earn its revenues from ads

Sweet tweets

Twitter plans to earn its revenues from ads

The advertising programme, which Twitter calls Promoted Tweets, will show up when Twitter users search for keywords that the advertisers have bought to link to their ads. Later, Twitter plans to show promoted posts in the stream of Twitter posts, based on how relevant they might be to a particular user.

Several companies will run ads, including Best Buy, Virgin America, Starbucks and Bravo. “The idea behind Promoted Tweets is that we want to enhance the communications that companies are already having with customers on Twitter,” said Dick Costolo, Twitter’s chief operating officer. Since Twitter started in 2007, its growth has resembled a hockey stick, increasing almost in a vertical line. According to comScore, Twitter.com had 22.3 million unique visitors in March, up from 524,000 a year ago, and that does not include the millions more who use the service through third-party smartphone and Web applications like TweetDeck or Tweetie.

Going Google way
Yet Twitter has been slow to monetize those users. Its founders, Evan Williams, Jack Dorsey and Biz Stone, have said it is following Google’s path — building a service that many people use, then figuring out how to make money. Though Twitter already has some revenue from deals to license its stream of posts to Google, Microsoft and Yahoo, Twitter’s announcement is the first significant step toward a business model. The ads will let businesses insert themselves into the stream of real-time conversation on Twitter to ensure their posts do not get buried in the flow.

Starbucks, for instance, often publishes Twitter posts about its promotions, like free pastries. But the messages quickly get lost in the thousands of posts from users who happen to mention meeting at Starbucks. “When people are searching on Starbucks, what we really want to show them is that something is happening at Starbucks right now, and Promoted Tweets will give us a chance to do that,” said Chris Bruzzo, vice president of brand, content and online at Starbucks.

Promoted message
When a Twitter user searches for a word an advertiser bought, the promoted message will show up at the top of the results, even if it was written much earlier. The posts say they are promoted by the company in small type, and when someone rolls over a promoted post with a cursor, it turns yellow.

The ads will also be a way for companies to enter the conversation when it turns negative. Several companies have created tools to measure sentiment on Twitter, but until now, businesses can do little with that information. Even if they write a post in response, it also quickly gets lost in a sea of complaints.

Companies will “be able to increase awareness in that instance when the iron is most malleable,” said Anamitra Banerji, who manages commercial products at Twitter. If a new movie is getting negative reaction, the studio could use the ads to link to a positive review, for example.

Twitter will measure what it calls resonance, which takes into account nine factors, including the number of people who saw the post, the number of people who replied to it or passed it on to their followers, and the number of people who clicked on links.
If a post does not reach a certain resonance score, Twitter will no longer show it as a promoted post. That means that the company will not have to pay for it. At first, companies will pay per thousand people who see promoted posts. Once Twitter figures out how people interact with the posts, it will figure out alternate ways to charge advertisers. In the next phase it will show promoted posts in a user’s Twitter stream even if a user did not perform a search.  
The New York Times

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