When Twitter launched four years ago it was a social networking idea without much of a business model. But the brains behind the microblogging site didn’t seem to mind, instead they focused on growing users— now up to 20 million users per month (comScore data)—and building venture capital—now over $100 million in the bank.
Yesterday Twitter launched its first profit spinning initiative, a promising advertising component called Promoted Tweets. A handful of big name advertisers including Starbucks, Sony Pictures, Virgin America, and Best Buy are the first on board.
With a growing number of marketers and music artists using Twitter as a promotional tool, advertising will be a significant new option when it is opened up to other companies. In fact, so many artists use Twitter to reach fans, MusicRow started a Twitter chart, ranking artists by the number of Followers. Until yesterday, Twitter users could only communicate with their Followers, but with Promoted Tweets, marketers will be able to push their message.
Ads appear when a user searches Twitter, similar to the way Google filters ads. For example, search for “coffee,” and if Starbucks sprung for that keyword, a Starbucks ad will appear at the top of the search results.
According to Twitter’s web site, “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.”
Currently, ad prices are based on every 1000 impressions, but the Wall Street Journal predicts an evolving model that eventually leads to charging based on how users interact with the messages.
Twitter draws some revenue from licensing partnerships with Google, Microsoft, and Yahoo, where Tweets appear in each company’s respective Internet search results. This ties into later plans for Promoted Tweets to show up across the Web. Other future plans may place ads in the stream of posts users see when they log in to the site.