Will Promoted Tweets Work?

April 15th, 2010

By Paul Verna

Well, it finally happened. After months, maybe years, of speculation, Twitter pulled the trigger on its ad monetization concept. We can now refer to it by its actual name: Promoted Tweets.

Everything we know about the plan so far is consistent with November 2009 comments by Twitter COO Dick Costolo and a February 2010 blog posting by All Things Digital’s Peter Kafka. That is, Twitter will show sponsored posts in feeds resulting from selected user-initiated searches. For example, when some users search for Starbucks or Best Buy, they’ll see ads from those companies before they see the string of conversational tweets that meet the search criteria. The Wall Street Journal noted that 2% to 10% of Twitter users will be part of the initial rollout, with more to come later.

At the most basic level, Promoted Tweets emulates the Google model of tying relevant advertising to search results. But that doesn’t mean Twitter will necessarily be able to monetize search to the extent that Google has.

Consider the differences between the platforms.

Google users tend to search for archived information, which makes them amenable to advertising as a tradeoff for thorough search data. On the other hand, Twitter users more often search for timely information and, in general, and are less likely to tolerate having their experience stalled by an ad. That being said, if Twitter is able to integrate Promoted Tweets into search results and user timelines as seamlessly as Digg, for example, it’s possible that users won’t be too bothered.

Then there’s the third-party issue. Many Twitter users access the service via external Web and mobile apps, so measuring the effectiveness of the ads will be more challenging for Twitter than for a closed-loop system. And measurability will be critical to the success of Promoted Tweets because the system is based on a CPM model. Even more importantly, Twitter has said it would discontinue ads that don’t measure up to a pre-established set of criteria. Twitter calls this “resonance,” and the factors that go into it include the number of people who saw the post, the number of people who replied to it or passed it on to their followers, and the number of people who clicked on links, according to The New York Times.

So, will Promoted Tweets work? This will depend on how consumers react to having a corporate presence in their Twitter feeds, which in turn will depend on how well Twitter implements this new model. So far, the company is acting cautiously, limiting ads to search results among a small percentage of its users, with a fixed number of brands participating.

It seems smart to float a trial balloon rather than launch a rocket ship. This will allow Twitter to gauge feedback quickly and correct course if necessary—all of which is easier in a limited-scale project.

Consumers have grown accustomed to sponsored search results, so transferring that paradigm from Google/Digg to Twitter is not a huge leap. The real test will come later, when Twitter attempts to run ads in user timelines. Can the company do this while continuing to grow its user base to its stated goal of 1 billion by 2013?

Probably not, but more modest growth fueled in part by this ad platform seems like a reasonable expectation.

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