# By John C Abell Email Author wired.com
# April 13, 2010 |
# 7:13 am |
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Twitter announced Tuesday that it will start showing some sponsored Tweets on some search pages, taking a cautious first step into a traditional advertising business model that could provide a steady source of revenue for the four-year-old start-up which doesn’t yet make any serious money yet but is reckoned to be worth a billion dollars.
The so-called Promoted Tweets will put tweets from paying customers at the top of some Twitter search pages, clearly marked as ads, the company said in a blog post. Users would otherwise see these Tweets only if they followed the related accounts, found them by chance in a search or saw them randomly in the Twitter timeline. Including the advertisement Tweets with search results — what might be called the Google model — is less intrusive than putting them, say, on “your” Twitter page when you log onto the site. Promoted Tweets will initially appear on only a small proportion of search pages.
And since they retain the character and length of a Tweet — 140 characters, no in-line images — they have the advantage of not seeming jarringly out of place. The content would be exactly what a Twitter user might expect from a company promoting its message on the service, though this will make ignoring that company and its message more difficult.
“Promoted Tweets will be clearly labeled as ‘promoted’ when an advertiser is paying, but in every other respect, they will first exist as regular Tweets and will be organically sent to the timelines of those who follow a brand. Promoted Tweets will also retain all the functionality of a regular Tweet including replying, Retweeting, and favoriting. Only one Promoted Tweet will be displayed on the search results page.”
Still, Twitter presented this milestone of their young history in cautious terms, possibly anticipating resistance from users who might see any ads an intrusion. In a quick assessment Forrester analyst Josh Bernoff writes in a blog post that “Of all the places Twitter could includes ads, this is the least obtrusive and the most relevant. People will not desert Twitter for this. It’s inevitable — technology services need revenue.”
Also, while Twitter.com is a popular destination, millions of people use desktop and smartphone apps for the service and rarely use the site at all. Some of those apps themselves have ads which Twitter gets no cut from — including Tweetie for the Mac and iPhone, made by a atebits, a company Twitter bought last week. Because Promoted Tweets will appears in search results on Twitter apps too, the company will get a piece of the action on those platforms as well.
The unusually long post, which includes an FAQ, describes Promoted Tweets as “a simple service” and Twitter’s move to this plateau the result of a “stubborn insistence on a slow and thoughtful approach to monetization.”
“Over the years, we’ve resisted introducing a traditional web advertising model because we wanted to optimize for value before profit,” Twitter said. “The open exchange of information creates opportunities for individuals, organizations, and businesses alike. We recognized value in this exchange and planned to amplify it in a meaningful and relevant manner.”
The program answers a question which Twitter has confronted for years now: How are you going to make any money? While it is a very flat organization with fewer than 200 employees (at last unofficial count; as a private company they are not required to disclose anything) private investments have imputed the company a value of $1 billion — and those investors are not exactly putting money into a charity. It does, however, already make millions from licensing its real-time data streams to Microsoft and Google.
Co-founder Biz Stone telegraphed Tuesday’s move last year in news conference in Tel Aviv at which he declared the company would “start making money” in 2010 using “non-traditional” advertising. Even then he stressed they had the luxury of going slow. “There are no dates when we need to break even. We have plenty of money in the bank,” he said, a month after Venture Partner kicked in $100 million, boosting the company’s valuation to $1 billion.
So Twitter knows it must carefully triangulate between a fickle user base which is the reason for its existence; developers whose innovative work on Twitter clients, aggregation and analysis tools have propelled the company into a household world; and backers who as expect not only great things from the company, but great returns.
Hence the timing: Twitter will speak in greater detail about this at the AdAge conference later on Tuesday, and begins a two-day developer’s conference Wednesday called “Chirp.”
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