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Summary:

According to multiple reports, Twitter is close to launching in-stream advertising, including a self-serve platform that will allow companies to inject ads into the network in real time. But how will users react to this intrusion? Forrester Research’s CEO says the move is a big mistake.

If there’s one thing Twitter users know, it’s that advertising is coming — and not just a few “promoted tweets” or “promoted trends” here and there, but actual branded advertisements appearing right in a user’s real-time stream. There have been several recent reports that ads will be rolling out soon, including a Reuters report that says Twitter is planning a trial of “self-serve” ads for major corporations. There’s no question that the company needs to do bring in revenue, but how will users of the service react to the sudden appearance of advertising in their streams? At least one analyst thinks that Twitter is making a big mistake.

Twitter has been experimenting with “promoted tweets” since April of last year, in which companies pay to have a tweet that refers to their brand or product show up at the top of search result pages, and also in a bar at the top of the official Twitter app for iPhone and other platforms (a somewhat controversial move that came to be known as the “dickbar” and was subsequently modified). The company later broadened that effort with something called “promoted trends,” which added sponsored messages to the trending topics that show up next to users’ profiles, and then “promoted accounts,” which suggest corporate accounts when users are looking for people to follow.

A self-serve ad platform is coming

Last month, however, the Financial Times reported that Twitter was close to taking an even bigger step: namely, launching promoted tweets and other branded advertisements directly into the streams of users (something Twitter has tested before with partners such as Hootsuite, a Twitter client used mainly by corporate accounts). On Wednesday, Reuters quoted anonymous sources as saying the company was close to allowing major brands to “tailor, automate and publish ads in bulk” on the network via a self-serve platform using the Twitter API.

Twitter has said it’s working on a self-serve ad platform similar to that offered by Google (companies that want to advertise using one of Twitter’s programs currently have to talk to a salesperson), but hasn’t said when it will be coming or whether it will launch as a limited trial. But it’s clear Twitter streams will soon be carrying a lot more ads. How will users react?

Obviously, Twitter hopes users react by clicking on those ads or retweeting them, so it can prove to companies that such advertisements demonstrate large amount of engagement, the metric most advertisers are looking for from social networks. Twitter has been selling its promoted tweets and trends to major brands such as Coca-Cola and Disney, and now has more than 600 corporate customers — and claims more than 80 percent of those who have tried a campaign have returned to do another, much higher than many similar web-based ad platforms.

For users who have grown accustomed to not seeing any advertisements at all, however, the appearance of branded and sponsored messages could come as a shock. While some Twitter supporters say they understand the company’s need to make money for what is a free service, others have said they will quit the service if it becomes overloaded with advertising. With Google+ ramping up its user base (Google CEO Larry Page confirmed Thursday that the two-week-old network already has more than 10 million registered users) Twitter now has more competition than it used to.

Twitter’s big mistake?

Forrester Research CEO George Colony, meanwhile, thinks Twitter is making a big mistake by resting so much of its revenue hopes on in-stream advertising. In a blog post on Wednesday, he called the reliance on ads “Twitter’s Bad Idea,” saying the appearance of advertising in what is effectively a conversational medium like Twitter isn’t going to go over well with users — and as a result, won’t be very effective in raising revenue either. Says the Forrester analyst:

It’s as if you held a dinner party and an uninvited stranger barged into your house screaming self-serving non sequiturs — and you can’t get rid of him. A search ad has the potential to help you; a “conversation ad” is simply disruptive.

And while Twitter might be hoping its ads will appeal to business-to-business customers as well as the consumer market, Colony says Forrester’s research shows Twitter “possesses very limited influence over B2B transactions,” at least in the technology space. The Forrester CEO says he believes promoted tweets are a bad idea on many levels, and that the company would be better off to “scrap them and head back to the whiteboard in search of a less intrusive way to justify its irrational market valuation.”

Twitter’s problem is — as I have pointed out before — it’s effectively a media company, a real-time information network, and therefore, its monetization options are fairly limited. For most media companies, advertising is the default method of bringing in revenue, primarily because users aren’t willing to pay for the actual information or content itself (or at least not enough of them are). But can it produce enough to justify the reported $8 billion valuation that company is expected to have after its most recent round of financing?

In other words, it has to make advertising work. Whether users will go along for that ride remains to be seen.

Post and thumbnail photos courtesy of Flickr users Michele Thompson and Social Sidekick

  1. Currently AdBlock on Chrome blocks Twitter promoted trends/users/ads. I am hoping it will do the same for Twitter so I can enjoy my stream ad-free.

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    1. And I’m sure Twitter hopes that it doesn’t :-)

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    2. Why don’t you pay $5/month to have an ad-free stream? What gives you the right to benefit from the hard work of others without having to pay for it?

      Unbelievable.

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      1. hard work…yeah right.

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  2. I think if Twitter handles Promoted Advertising Tweets just like it handles other tweets (that is, they are just another tweet in my stream, but clearly marked as an advertisement), then the reaction will be pretty poor. But if they are handled in a different way, perhaps the same way that Tweetie used to handle ads, in an attractive way that clearly stands out, it could be tolerated. People tolerated ads in various Twitter clients that were in-timeline (Tweetie, Echofon, and Twitterific come to mind). But it probably won’t be as successful as Twitter expects they will be.

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  3. Such an annoyance could open up opportunities for GooglePlus. Adding microblogging capabilities (share to my public Microblog circle?, with some kind of character limit / auto shortening feature) would not be heavy lifting for the engineers at Google. Google could still advertise, but with Adwords in a side frame, not embedded in the stream.

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  4. bloody advertising….

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    1. I know, right? Who came up with that idea? :-)

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  5. i’ll pay for the service if it’s ad-free, and i would pay for my entire tweet history, if those stoners actually have it somewhere in some forgotten server somewhere … but i won’t use it with ads in the stream .. that is theft of my attention and i don’t allow it

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  6. Boy, the Forrester guy has a bug up his butt, huh? Most popular Twitter clients display ads. Google and Facebook display ads. Heck, this blog has post stream ads! Mid- stream ads should not be disruptive if done well. Twitter users follow many, and this scroll quickly. That’s the value of the tweet, short and sweet, allowing the user to scan massive amounts of disparate info quickly. A nice looking mid- stream ad adhered to our interests every 15 minutes….no problem at all. It is beyond easy to scan right past it, but if it matches our interests, some users will even welcome ads. This is the most trivial of inconveniences for an extremely valuable service for us data junkies.

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  7. Michelle Walkden @MichWalkden Friday, July 15, 2011

    I have enough trouble with my Twitter steam as it is without further unwanted interference from advertising. I’d be much happier to pay a subscription fee, whether all-you-can-eat or some other module model, then put up with adds in me stream.
    Unfortunately for advertisers, fortunate for me, if the ads are placed elsewhere on my page I have learned simply not to see them.

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  8. I don’t believe the advertising backlash will be anywhere near what naysayers expect. Twitter is obviously a valuable resource to many people and they will accept reasonable intrusions in return for the continued use.

    Personally, I believe much of the noise comes from tech snobs that believe their use of the web should be free. Nothing is, has ever been, or will be free. If you don’t like it, don’t use it … or spend your life building and maintaining a great platform that nobody wants to pay for.

    Thankfully, tech snobs are but a fraction of web users and society in general. Thank god for that.

    George

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    1. Just because you don’t want in-stream ads doesnt make you a tech snob…it just means twitter should find a better revenue stream. There’s lots of them…do some user testing…n pick the one your users like… In stream ads would be choice C…in terms of revenue and likeability

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  9. The lack of a business plan or strategy is biting Twitter in the butt.

    They are borrowing from Google to create el-cheapo volume, self-serve ads and place then where we don’t want them. The value of AdSense is that it places ads where we do want them (or, can easily ignore them).

    Twitter has had numerous methods it could employ to make real money: Access to it’s firehose and APIs (rather than crushing it’s developer ecosystem); I offered to pay 3 years ago for faster API hits. Or, development of brand ad solutions that actually communicate WITH customers, rather than shout at them (I’ve seen this tested unofficially without Twitter’s approval, it’s a great ad/crm solution). Best Buy should have been paying (and they would have) for their @Twelpforce access…

    The list goes on and on…instead, we get garbage ad-units that will make Google+ appear like Nirvana (not the album cover with the penis on it).

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  10. The people who made this are primarily coders who simply have no idea on monetisation let alone what next to do with it.
    I’d say crowd-source ideas and give the winner trending status for a month or something similiar. If people are part of a change they accept it more….use your membership you idiots.
    Users probably see more potential in this platform than it’s creators – but this is not unusual.

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