We’ve written a lot about Twitter’s attempts to put a lid on its real-time information network and control as much of the content that flows through it as possible — especially the advertising, which is the key to the company’s ability to monetize that network. Unfortunately for Twitter, there are still plenty of holes in that lid, including the one that The Associated Press newswire is currently using to distribute its own “sponsored tweets” as part of an advertising campaign with Samsung during the Consumer Electronics Show. It’s just like Twitter’s promoted tweets, except the network doesn’t see a dime. How much longer can it allow this kind of practice to continue?
The Associated Press announced the campaign on Monday during the launch of the giant CES conference, saying it would be posting the sponsored tweets twice a day for the duration of the show, and that the content for the messages would be “provided by Samsung and handled by staff outside the AP newsroom.” The latter comment seemed to be designed to address criticisms that using its Twitter feed in this way might run afoul of journalistic conflict-of-interest guidelines, but AP said it had developed internal guidelines that would allow it to do so “without compromising its newsroom values.”
— The Associated Press (@AP) January 7, 2013
Judging by some of the responses to the AP’s first sponsored tweet on Monday, some readers and followers aren’t too crazy about the idea of the newswire mixing news and advertising in its stream. But the one who is likely the most upset by this move is Twitter, since promoted tweets — and other related offerings such as promoted trends — are seen by many as a crucial part of the company’s drive towards monetization and justifying its estimated $10-billion market value.
Twitter CEO Dick Costolo and the network’s head of advertising, Adam Bain, have both talked about how successful the company’s advertising strategy is, and the engagement metrics that companies and brands see when they use the network’s sponsored tweets. But the Associated Press campaign highlights one of the biggest risks for Twitter in this approach: namely, that media entities who also have relationships with advertisers will side-step the company’s program and try to take over the middleman role themselves.
Doing an end-run around Twitter’s ad program
Twitter has cracked down on outside ads in a number of ways, including outlawing third-party networks that insert ads into a user’s stream automatically, since that competes directly with the company’s own “do it yourself” ad program, which it launched recently. However, its policies still allow accounts like Associated Press to run their own sponsored tweets — provided those tweets aren’t posted automatically through the Twitter API:
“In cases where these Tweets are paid or otherwise sponsored, any payment arrangements are the responsibility of the user and the sponsoring brand or service. These “sponsored” Tweets are not prohibited, provided they clearly disclose the nature of the sponsorship on Twitter, and do not otherwise violate the Twitter Rules.”
As the WSJ pointed out in a piece on Twitter’s ad strategy last year, one of the big benefits for brands is that the social network allows them to connect directly with their fans. Unfortunately for Twitter, that ability also makes it less likely that some will bother paying the network for the right to do so. And moves like the one The Associated Press has made add another layer of difficulty — if AP and others are charging less, then why would a brand use Twitter’s advertising program at all?
Of course, Twitter’s ad strategy offers a number of features that a campaign with someone like AP doesn’t: for example, it can be used to target specific users with specific interests across the entire network, whereas Samsung is just getting whoever follows the AP’s feed. And Twitter has an interesting twist on the pay-for-engagement idea — the less interaction promoted tweets get, the less an advertiser has to pay. Presumably, the network can also offer analytics around who interacted with a tweet and how, something a user like the AP wouldn’t be able to offer.
That said, however, every advertiser that chooses to go the same route as Samsung makes it harder for Twitter to justify using its own in-house program. In the future, it will likely have to either up the ante with more features, or crack down even harder on those who offer advertisers an end-run around its program — or ask for a share of the revenue.