Promoted Tweets And The Twitter Monetization Strategy

The day before Twitter kicked off its developer conference Chirp this week they announced they had a monetization plan and that plan would include paid tweets and that they were now rolling out in a limited fashion. During the Chirp conference they talked a little more in depth about what exactly paid for tweets meant and how they would implement them on the site. If you don’t feel like watching the entire 30 minute presentation you can see my summary below the embedded video followed by my thoughts on promoted Tweets and the Twitter ad platform.

Ev Williams came on stage first and before talking about the new promoted tweets feature discussed how:

• If you have the traffic you will make money eventually
• That Twitter wants a long term revenue stream not a short term
• That the revenue model must be beneficial to users
• Now it is important to Twitter to build out core features of the platform instead of adding in new user features

Ev then introduces Dick Costolo to explain in detail what that revenue model will be and how they will be rolling it out.

• First step of Twitter monetization is promoted tweets
  • Promoted tweets must be organic to the platform of Twitter
  • Had to be a monetization engine that not only worked on Twitter.com but worked everywhere tweets went
  • Revenue model would be fascinating, non-traditional and awesome
  • Promoted tweets are not ads
  • Ads are only tweets. Anything you can do to a tweet you can do to a promoted tweet.
• To set up a campaign
  • Go into your Twitter.com settings tab and choose campaigns
  • From Here you can select keywords
  • Choose some of your own tweets you wish to promote – Can only select your own account tweets or tweets directly associated with your account
  • Promoted tweets are identified by different colored background and a promoted by tag below the tweet
  • The promoted tweet can be replied to, favorited and re-tweeted just like a normal tweet
• As stated before anything you can do to a tweet you can do to a promoted tweet
• Promoted tweets allow companies to engage with their audience real-time beyond organic tweets
• Promoted tweets have the potential to enhance the user experience on Twitter and not harm it
• Uses a movie example where twitter can predict the weekend box office top earners. Promoted tweets can be used to send links to reviews etc…to get the word out about the movie faster than organic tweets.
• Real time promotion – Use it as a way to monitor a trending topic (ipad for example) and then use a promoted tweet to guide users to a solution (or to sell to them). Gives them the opportunity to get that tweet posted to the top of the twitter search results which Twitter believes will be helpful to the users.
• Real-time analytics will be available for promoted tweets
• Initial launch of promoted tweets happens only on twitter.com and only for search.
  • Twitter only is starting with a small group of advertisers to use them as a test bed to see if promoted tweets work the way they envisioned and to make sure they have the user experience right.
  • Promoted tweets will roll out to the entire ecosystem when twitter feels they have it just right for both advertisers and users
  • Promoted tweets will eventually be distributed to the entire twitter ecosystem and advertisers can not choose to keep their ads only on twitter.com or only in this third party app. It’s all or nothing.
  • Once syndication is hammered out and where they feel it is ready it will be rolled out for expanded delivery.
• Resonance – Multiple axes of engagement
  • Don’t want to force the measurement of engagement using only one axes. Not measuring solely based on clicks or follows
  • Resonance measures all the different ways people engage with tweets. Replies, hashtags, clicks on hashtags, clicks on links, RT etc…
  • There will be an expected resonance score for advertisers.
  • Resonance will be used to decide which promoted tweets to display.
  • As an advertiser creates a promoted tweet, Twitter will display the multiple tweets equally until the one with least resonance is discovered and that one will be dropped.
  • Promoted tweets that don’t resonate with users will be dropped from promoted tweets.
  • Will stop showing promotions that don’t work with users. Those promoted tweets that don’t work will disappear. Because they are still tweets users who follow those streams will still see them.
  • Priced on a CPM basis at first will move to an ROI model when understood better
• Targeting an interest graph
• Not just about Twitter.com making money – more interested in a model that scales with the ecosystem
• It’s about the entire ecosystem making money.
• 50/50 revenue split between twitter and the ecosystem partner after it has been rolled out for syndication
• Not forcing ecosystem to use promoted tweets
• TOS will be revised soon to reflect what will be allowed and what will not be allowed to appear in the stream

My Thoughts On Promoted Tweets

It’s been asked a lot and we finally have an answer to how Twitter plans to make money in order to be successful in the long run. The way Twitter plans to integrate promoted Tweets seems to strike a fair compromise between protecting users interests and creating a revenue model that will sustain Twitter into the future.

Twitter seems to have thought long and hard about what is not only best for itself and its investors but what is best for their users as well and have created a advertising platform that seems at least at first glance to be quite similar to the ad system that Digg currently uses on their site. The system that allows for users to determine if the ad is relevant and worth checking out may scare advertisers at first but will ultimately force them to craft relevant and engaging ads that entice users to click on or interact with.

I do find it interesting that Twitter never mentions pricing specifically in the presentation anywhere except to say that it will be a CPM model and then will be upgraded to a ROI model in the future when Twitter understands how promoted ads best function within the ecosystem. Another part of pricing that I am curious about is how Twitter will differentiate what it terms resonance in regards to pricing. If a user clicks on a link within the promoted tweet, retweets it and favorites it does the advertiser get charged three times? Or will they be charged just the onetime per user? This is something that will have to be addressed after they transition out of the CPM model.

I hate to compare promoted tweets to Adwords but since Google does have one of the best PPC models comparison is bound to happen and in stating that I wonder if promoted tweets will function like Adwords and those advertisers that have a higher resonance score will get a higher placement in the search results as well as a lower ad cost and where lower resonance scores are given does that advertiser have to pay an increased cost to get to the top result?

I also found it interesting that nowhere during the presentation is it mentioned what happens to businesses who are competing against the same keywords. Is only one promoted tweet allowed per search result? Or will there be multiple promoted tweets per search result in the same way Google shows its ads? Will the resonance score be the determining factor as to which promoted tweets are shown and which are pinned to the top of the results? If Twitter limits its search results to displaying only one promoted Tweet they limit their own revenue but enhance user experience but if they decide to show multiple promoted tweets per search result they can maximize profitability but push organic tweets further down the result page and this may harm user experience.

One other item that wasn’t addressed anywhere within the presentation is if Twitter plans on using localization to display ads. Will advertisers be able to target those users specifically located within a region or a city? With users being able to set their exact location within twitter I would think this could be a feature that advertisers would desperately want.

I am glad to see that Twitter has developed a strategy in order to generate revenue as this will ensure the long term survival of Twitter but I found that the presentation answered very few questions while leaving me with far more unanswered questions.

It will be interesting to see how the Twitter monetization strategy evolves over the upcoming months and what happens when promoted Tweets are rolled out to all users. Twitter will be performing a delicate balancing act between satisfying the needs of advertisers while ensuring that their users aren’t assaulted with an over abundance of ads cluttering their search results and their Twitter streams.

What do you think of the Twitter promoted tweets advertising platform? Will you be using promoted tweets as soon as the platform is rolled out to all?