The Twitter Ad Model Revealed (What Were You Expecting, a Pony?)

If you don’t care about Twitter news, you may as well rejoin us next week. Over the next few days, Twitter is going to dominate the airwaves — and it starts tonight. In advance of his keynote at the Ad Age conference on Tuesday (not to mention Twitter’s own Chirp conference on Wednesday), COO Dick Costolo shared details of the company’s highly anticipated new ad platform, Promoted Tweets, with a couple of news outlets.

In the most basic implementation, advertisers will be able to bid on keywords to have their tweets featured in search results. But Twitter says it may also include paid tweets in users’ regular tweet streams too, something that will surely be more controversial. Costolo said the company expects to decide whether to take that step before the end of the year. Here are some of the promoted tweets implementation details, per stories in Ad Age and the New York Times

* Promoted tweets show up based on how large a CPM (cost per thousand) an advertiser pays.
* Twitter is developing a “resonance” metric (apparently not done yet — which makes you wonder what have they been doing these last few months!) that would also take into account how well a tweet fosters engagement and click-throughs.
* Twitter is limiting advertising to only one sponsored tweet per page.
* After the promoted tweets launch on its site, Twitter plans to start syndicating them to Twitter clients.
* Launch advertisers include previously tweeting companies Best Buy, Virgin America, Starbucks and Bravo.
* The actual promoted tweets will disclose that they are ads, and will turn yellow when moused over. But they won’t be separated out on the margins from the other tweets.
* Twitter is considering using targeting factors like subject matter, followers’ interests, and geographic locations to target ads in users’ streams, if they do launch.

Costolo told Ad Age that search volume on Twitter is “huge” but wouldn’t give actual numbers. Promoted Tweets is quite similar to TweetUp, the tweet marketplace launched by Bill Gross on Monday. It is going to be hard for TweetUp to spin this development into a good thing. It also follows other recent moves by Twitter to compete with developers using its platform, for instance buying the maker of Tweetie last week.

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