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Promoted Tweets: AdWords for Twitter

Last night, Twitter announced their much-anticipated advertising model: Promoted Tweets.

Twitter: The Start-up Darling

Most of our readers are already familiar with Twitter, the social networking and microblogging service that people and businesses use to broadcast updates (“tweets”) in 140 characters or less. Twitter launched in 2006, hit its stride in 2007, and became the darling of the start-up world in 2009 when Oprah featured the site on her show, which some analysts suggest resulted in over a million new account sign ups.

Along the way, experts have been speculating about whether Twitter can translate its massive user-base to profit. Up until now, Twitter’s revenue has come primarily from search deals with Google and Microsoft, to allow real-time search integration with their own search engines.

Twitter’s own real-time search engine is a huge part of its draw. Millions of people around the world, including journalists themselves, searched Twitter for live updates about top news events like the Iran Election Protests and Haiti earthquake. Trendwatchers follow Twitter’s “trending topics” closely to determine the “next big thing” (and even try to use it to make NCAA Final Four predictions). The Twitter trend feature, topic feeds, and more are all built on top of its search engine.

Promoted Tweets: A Familiar Song

Now, with Promoted Tweets, they’re leveraging that search function even more and adding a new revenue model to the mix. This service will allow businesses to pay for their tweets to be promoted to the top of the Twitter searches they choose. Sound familiar?

Red Bull's Promoted Tweet

The model is remarkably similar to the paid-search advertising model used by Google, Yahoo, Bing, and many other engines. Advertisers choose the keywords they’re interested in, and bid for placement at the top of the results.

Also similar to traditional paid search, a top bid does not necessarily guarantee top placement (not forever anyway). Like Google’s “Quality Score” factor, which rewards ads that seem to resonate with users, Twitter will only promote those Tweets that meet a threshold “Resonance Score,” based on users interactions with the Tweets. Users can interact with Promoted Tweets just like regular Tweets – by retweeting, favoriting, and replying to the tweet.

Twitter says that for now, advertisers will pay-per-thousand-views (a.k.a. pay-per-impression) of the promoted Tweet, but they’ll introduce other bidding options in the future. A Resonance Score based on user interactions almost certainly spells out a new pay model for the industry- pay-per-interaction. Tweets don’t have to link to anything, so the model can’t exclusively be pay-per-click. Pay-per-impression is not particularly innovative, and would leave room for gaming the Resonance Score model (what’s to stop big companies from getting all their employees to favorite their Promoted Tweet to maintain a high resonance score?). I expect (hope!) it will be some sort of hybrid between pay-per-click and pay-per-interaction.

What’s Next

Right now Promoted Tweets are only being shown on Twitter search itself, but there are plans to allow Promoted Tweets to be shown by Twitter clients and other ecosystem partners soon. On their blog, Twitter indicates this would include displaying relevant Promoted Tweets in a user’s account timeline, which suggests they will show promoted Tweets in the user’s own feed even if they are not following the advertiser directly.

So long as Twitter exercises restraint, and I imagine they will, I don’t think there will be a huge backlash by users seeing these Promoted Tweets in their own feed. That said, I am curious to see how partners like Google and Microsoft will react to promoted Tweets in the API. Will they accept showing Twitter promoted Tweets in their real-time search results for a cut of the revenue? Or will they block these promoted Tweets altogether? Will Twitter provide a revenue share akin to AdSense with those users who embed a Twitter feed on their own site? (I doubt it.) Will they allow sites with embedded Twitter feeds to block Promoted Tweets? (I think site owners will demand the ability to block specific advertisers at least, particularly if Twitter allows political advertising.)

For the time being, the program is only open to specific partners “that include Best Buy, Bravo, Red Bull, Sony Pictures, Starbucks, and Virgin America — with more to come” and there will only be one promoted Tweet per search results page. As Twitter begins to scale its program, I imagine they’ll run into no small number of challenges. Among the things they’ll have to build for a full launch to the public (in no particular order):

  • Advertiser interface for creating and managing an account
  • Reporting interface and conversion tracking system
  • Broad matching algorithm to ensure that their revenue is not severely limited by the specificity of advertiser keyword lists
  • Billing & payments system (not to mention fraud protection system)
  • Advertiser customer support team, help centers, etc.
  • Impression, click, and (now) interaction spam filters and protections

All that work plus scaling what is no doubt an incredibly complex real-time bidding process (especially considering their resonance score calculation), and it looks like there is a long road ahead. Advertisers spending big bucks will not be as patient with the famous Fail Whale as your typical Twitter user.

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