We all knew something like this would come once Twitter decided to make money. But that doesn't make it any easier for the companies hit hard by today's news that Twitter is banning all third party ad networks. The news comes shortly after Twitter announced a plan to roll out Promoted Tweets, a system that displays ads based on keywords in search queries. So it makes sense to prohibit in-stream advertising—it interferes with Twitter's own monetization strategy.
The Twitter Blog elaborates on the company's reasoning:
First, third party ad networks are not necessarily looking to preserve the unique user experience Twitter has created. They may optimize for either market share or short-term revenue at the expense of the long-term health of the Twitter platform. For example, a third party ad network may seek to maximize ad impressions and click through rates even if it leads to a net decrease in Twitter use due to user dissatisfaction. Secondly, the basis for building a lasting advertising network that benefits users should be innovation, not near-term monetization. Twitter is uniquely dependent on and responsible for the long-term health and value of the platform. Accordingly, a necessary focus of Promoted Tweets is to explore ways to create value for our users. Third party ad networks may be optimized for near-term monetization at the expense of innovating or creating the best user experience.
All of that may be true, but this is really about Twitter's newfound bottom line. And it's going to hurt a lot of companies, many of which are putting on a brave public face for all of this.
IZEA, a company that calls itself a "world leader in sponsored conversation," relies on in-stream advertising heavily. But Ted Murphy, the CEO of IZEA, tells FastCompany.com that he isn't concerned about Twitter's changes. "Sponsored Tweets will be a little more manual now. I understand why Twitter is doing that but in the end we are going to keep doing what we do," he says. "We took out the ability for the advertiser to write the message a while ago. It makes things more complicated between advertisers and tweeters. My biggest concern it was very easy for us to mandate disclosure—not having it come through our system we are seeing it after the tweet, it changes the process." In the past, IZEA slipped messages automatically into a participant's Twitter stream via Twitter's API. But the company isn't planning on nixing in-stream advertising altogether—participants simply have to craft their own sponsored messages. The question then becomes, of course, how IZEA will effectively monitor participants' sponsored tweets.
Ad.ly, another third-party in-stream advertising service, is remaining ominously quiet. "At this time ad.ly executives are reviewing twitter’s recent statement and information and will have a response in the next few days," a company spokesperson tells FastCompany.com. We're sure that every other in-stream advertising service is reviewing Twitter's statement as well—and probably trying to think up new business plans as quickly as possible.
With additional reporting from Lydia Dishman