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 (s tri) 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 (s pso) 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 (s ko) and Disney (s dis), 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.