Aside from a few small deals with Google, Yahoo, and Microsoft to integrate Twitter updates into search results, Twitter has held off announcing any kind of real monetization plan. The founders have said that they want to follow Google's path: create a product everyone wants to use, and then figure out a way to make money from it after. Today, the New York Times revealed exactly how Twitter plans to do that—at least, how they plan to start doing it.
Twitter calls this first step Promoted Tweets. Advertisers, which at launch will include Best Buy, Virgin America, Bravo, and Starbucks, can buy keywords used by Twitterers in search. When a user searches for one of an advertiser's purchased keywords, an ad will appear at the top of that user's Twitter feed. The Promoted Tweets will be in smaller than usual type, and will turn yellow when the cursor is passed over them.
At first, these Promoted Tweets will only be seen on Twitter's site, not through any client (including mobile clients like Twidroid and Tweetie as well as desktop clients like TweetDeck), and they'll only be linked to search keywords. Use a mobile app, or use the Twitter site without searching, and you won't see any ads—for now. But even in this early stage, businesses have more control over Twitter ads than over ads in pretty much any other medium.
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.
Extending that movie example, we already know that Twitter is an excellent bellwether of a film's success. But convincing people to see a movie is a totally different game, and nobody knows if Twitter ads will see all that much success in changing the conversation. So Twitter's providing a way out: If an ad performs poorly in the set of rubrics Twitter calls "resonance," they'll pull the ad. That way, the company won't have to pay for an ad that doesn't work, and users won't have to put up with crappy ads that don't work. Resonance is decided by nine factors, including the number of views, number of replies and links, and number of people who click on those links.
But Twitter's not going to stay content with this first step. After all, they just bought the best iPhone Twitter app, Tweetie, and are making it available for free—it's not an unreasonable supposition to think that they'll integrate these Promoted Tweets into Tweetie. Later, they'll pop the ads into a user's feed, so even if a user chooses a third-party client or doesn't use Twitter search, they'll see ads. Which ads will be put into which user's feed is still being decided, but it'll likely be chosen based on a combination of interests, geographic location, and even the interests of people you follow. To use myself as an example, I follow mostly comedians on my Twitter. So I might see Promoted Tweets telling me when a comedy show is coming to San Francisco, where I live.
Ads are no fun for users, of course. It'll be slightly annoying to see sponsored Tweets in with the updates you actually want to read. But if Twitter does this carefully, and it sounds like they are, these Promoted Tweets might actually be good for advertisers and only marginally annoying for users. I'd probably click on that ad for a local comedy show—Twitter just needs to get the right ads to the right users.