Twitter will today officially announce the launch of a business model. After years of speculation, and skepticism, Twitter has decided to try its hand at the keyword-based advertising business model that built Google into a billion-dollar powerhouse.
According to the New York Times, Twitter's new ad offering, dubbed Promoted Tweets, will display ads that "show up when Twitter users search for keywords that the advertisers have bought to link to their ads".Here's how it works:
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.Major brands reportedly participating in the launch include Best Buy, Virgin America, Starbucks and Bravo -- all companies that are already active participants on Twitter. That's not surprising given that Twitter's CFO, Dick Costolo, told the Times:
The idea behind Promoted Tweets is that we want to enhance the communications that companies are already having with customers on Twitter.This is an important point, because searches on Twitter are far more likely to lack the not-so-secret sauce that has powered Google's empire: intent. Without a large volume of intent-driven searches in lucrative markets, Promoted Tweets are unlikely to bring Twitter Google-like success.
But that doesn't mean that Twitter can't find a niche for its shiny new ad product. One of the more intriguing opportunities Promoted Tweets offer advertisers: the ability to use Promoted Tweets during a Twitter crisis. As Anamitra Banerji, a Twitter employee, puts it, advertisers will now "be able to increase awareness in that instance when the iron is most malleable".
Additionally, Twitter plans to extend Promoted Tweets into the stream, meaning Twitter's users will get their first taste of forced ad viewing. The reaction should be interesting to follow.
The big question, of course, is how far the Promoted Tweets value propositions can take Twitter as a business. A big challenge for Twitter: keeping ad quality and relevance high while still making money. It's an issue that other social startups (namely Facebook) have been forced to grapple with and you can be sure that savvy spammers and arbitrageurs will be taking a close look at Promoted Tweets.
The good news is that Twitter is finally moving to monetize one of the internet's hottest properties. At the very least, within six months it should be possible to go from talking about Twitter's potential to talking about Twitter's profit (or lackthereof).
