Preparing for Twitter’s new advertising model
05.24.2010
In:
Interactive
In a new report, “Twitter Usage in America: 2010,” Edison Research provides new data on awareness and usage of Twitter, along with user demographics, and information on status updating behaviors and brand following practices of 1,753 Americans. The study found that awareness has grown from 5 percent of Americans in 2008 to 87 percent in 2010, and 51 percent of active Twitter users follow companies, brands or products on social networks.
After years of speculation on how Twitter would monetize its wildly popular, increasingly mainstream micro‐blogging social network, the company has finally unveiled an advertising model.
Promoted Tweets is a combination of paid and organic media that will allow brands to advertise on search pages. The initial rollout will be made available to a select group of businesses equal to roughly 2 percent to 10 percent of Twitter users, according to The Wall Street Journal. Considerable expansion of these offerings is expected at a later date.
Twitter co‐founder Biz Stone wrote on a company blog that their new "Promoted Tweets" program will enable marketers to “prominently insert their own messages in the back‐and‐forth between users.”
Initial advertisers in the program include Starbucks, Best Buy, Bravo, Red Bull, Sony Pictures and Virgin America.
What to expect: There is a great deal of speculation on how this new model will be received by Twitter users. Capstrat expects challenges that may arise with the introduction of “sponsored messages” into the Twitter ecosystem. We’re betting that the broad familiarity we all have with sponsored search results on Google will mean that this approach won’t be too jarring to the Twitter experience, a huge plus for Stone and company.
What makes this organic? With Promoted Tweets, resonance is key. It is by this new metric that Twitter will factor in numerous user behaviors. If you are at all familiar with Twitter, you know that recommendations and endorsements are known as “retweets.” When content is “retweeted” or shared by other users, the effects can be extremely beneficial and quite dramatic. Twitter is tapping into that dynamic by allowing only tweets with high user resonance to be available to advertisers as promoted Tweets.
How we think promoted Tweets will work. Here is a sample of how a promoted Tweet would appear in search results as envisioned by Web strategist Jeremiah Owyang:
- Twitter users will continue to interact with each other, and popular tweets will receive a high ‘resonance’ score from Twitter. Some of these Tweets will be created by brands, and some by the users themselves.
- Tweets with heavy resonance will be sold to advertisers on a CPM basis as ‘sponsored’ Tweets
on search term results. They will be clearly labeled and have a highlighted background color. - These promoted tweets will only stay at the top if users continue to resonate with them. Nonresonating Tweets will disappear and be replaced by ones that do resonate. Capstrat believes that this crucial resonance metric is only loosely defined at this point, so we can only speculate that scenarios like that outlined by Owyang are likely. Some members of the Twitterverse suggest that brands will only be able to select from their own, existing Tweets as opposed to those of other users, which is the case in the above scenario. We have also heard speculation that promoted Tweets will appear in other locations beyond search; there has been no confirmation of this by Twitter. We will continue to follow the evolution of Twitter’s monetization strategies and provide updates and more directed guidance when Twitter has more precisely defined how resonance will work.
Challenges: This new advertising model does not come without challenges. Our biggest concern is that searches represent only a small portion of Twitter activity. Of the 80 million users visiting Twitter in a month, fewer than 3 million use search, compared with Google’s 300 million. Another challenge is the evasive “resonance score,” which will prioritize the position of promoted tweets in search results. And of course there is a long history of backlash to the first appearance of advertising in a new medium.
What this could mean for you: People use Twitter search to discover real‐time updates they can't get anywhere else. When someone searches for a brand, specific hashtag or keywords that you have purchased on twitter.com, they will see your Promoted Tweet ahead of anything else, including the conversational Tweets that meet the search criteria.
This could be a real game‐changer for product launches, customer relationship services, event marketing, local elections, crisis management advocacy and much more.
Next steps: Work with Capstrat to create a Twitter presence, or develop a Twitter strategy and timely campaigns of Promoted Tweets. If advertisers can initially promote only their own Tweets or those from related accounts (which we believe will be the case), companies with an established Twitter presence will be positioned for success. If you have no presence on Twitter, promoted Tweets simply may not be an option for you. If you have been unsure about the benefits and potential of Twitter, now is the time to reassess your position.
Twitter acknowledges that the company will learn a lot as the program grows and that changes to their processes are likely. Our guidance will surely change as the program matures. It is likely that Twitter will roll out additional features based on feedback from users, and you can count on Capstrat to monitor the latest developments and help you craft strategies accordingly.
