Twitter advertising still experimental

Ronny Kerr · September 27, 2010 · Short URL:

Paid ad Promoted Tweets might be undercut by Twitter's very nature, which lets anyone tweet for free

Promoted TweetsIt has been five-and-a-half months since Twitter unveiled its first stab at monetization in the form of Promoted Tweets, a special kind of tweet that’s paid for by an advertiser to appear in search results on the site. While the uber-popular microblogging site says it does not feel much pressure to show outstanding results this early in the game, many in the tech world have high expectations for the site, which saw its user base balloon in the first half of 2009.

And so far, based on some tell-tale signs, Twitter might not be meeting those expectations.

For example, two giant brands that both tested out Promoted Tweets for free in its early stages, Best Buy and PepsiCo, have not been repeat customers.

"It is a totally new and different kind of ad format. There is a lot we still have to learn and think about," says Shiv Singh, head of digital for PepsiCo Beverages. Though Twitter hasn’t been ruled out as a potential powerful space for advertising, PepsiCo still sees it as an experimental space.

One cannot help but wonder whether Twitter itself, by its very nature, is undercutting its own advertising efforts. That is, in creating an open space where anybody--including companies, brands, etc.--can create a free profile to interact with their customer base and even potential future customers, has Twitter made it hard on itself to now try selling special branded tweets?

Twitter still has to prove that Promoted Tweets, which now sell for around $100,000, are actually worth that much more than a regular tweet. While they do receive some analytics tools when purchasing Promoted Tweets, marketers say they would still like more options for targeting.

Significantly, we still haven’t reached what Twitter in April called the next “phase” of their advertising strategy, like the placing of paid tweets directly in the user’s stream, an update that could add a good deal of value to Promoted Tweets.

Facebook, in contrast, has not yet experimented with a model that places advertising anywhere in the stream or search results, preferring to relegate the paid text and images to their traditional space in the side of the browser space.

In spite of it all, the official Twitter statement is that their ad strategy is doing just fine. An average of 5% of Twitter users that see Promoted Tweets interact with them, according to COO Dick Costolo. Additionally, almost 80% of Promoted Tweets customers are return buyers.

All the same, Twitter advertising is still very much in its infancy and, as a result, we won’t really be sure of its successes and shortcomings until it has spent more time in the wild.

(Note: Twitter COO Dick Costolo will be speaking at VatorSplash this Thursday).

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What is Twitter?

Twitter is an online information network that allows anyone with an account to post 140 character messages, called tweets. It is free to sign up. Users then follow other accounts which they are interested in, and view the tweets of everyone they follow in their "timeline." Most Twitter accounts are public, where one does not need to approve a request to follow, or need to follow back. This makes Twitter a powerful "one to many" broadcast platform where individuals, companies or organizations can reach millions of followers with a single message. Twitter is accessible from, our mobile website, SMS, our mobile apps for iPhone, Android, Blackberry, our iPad application, or 3rd party clients built by outside developers using our API. Twitter accounts can also be private, where the owner must approve follower requests. 

Where did the idea for Twitter come from?

Twitter started as an internal project within the podcasting company Odeo. Jack Dorsey, and engineer, had long been interested in status updates. Jack developed the idea, along with Biz Stone, and the first prototype was built in two weeks in March 2006 and launched publicly in August of 2006. The service grew popular very quickly and it soon made sense for Twitter to move outside of Odea. In May 2007, Twitter Inc was founded.

How is Twitter built?

Our engineering team works with a web application framework called Ruby on Rails. We all work on Apple computers except for testing purposes. 

We built Twitter using Ruby on Rails because it allows us to work quickly and easily--our team likes to deploy features and changes multiple times per day. Rails provides skeleton code frameworks so we don't have to re-invent the wheel every time we want to add something simple like a sign in form or a picture upload feature.

How do you make money from Twitter?

There are a few ways that Twitter makes money. We have licensing deals in place with Google, Yahoo!, and Microsoft's Bing to give them access to the "firehose" - a stream of tweets so that they can more easily incorporate those tweets into their search results.

In Summer 2010, we launched our Promoted Tweets product. Promoted Tweets are a special kind of tweet which appear at the top of search results within, if a company has bid on that keyword. Unlike search results in search engines, Promoted Tweets are normal tweets from a business, so they are as interactive as any other tweet - you can @reply, favorite or retweet a Promoted Tweet. 

At the same time, we launched Promoted Trends, where companies can place a trend (clearly marked Promoted) within Twitter's Trending Topics. These are especially effective for upcoming launches, like a movie or album release.

Lastly, we started a Twitter account called @earlybird where we partner with other companies to provide users with a special, short-term deal. For example, we partnered with Virgin America for a special day of fares on that were only accessible through the link in the @earlybird tweet.


What's next for Twitter?

We continue to focus on building a product that provides value for users. 

We're building Twitter, Inc into a successful, revenue-generating company that attracts world-class talent with an inspiring culture and attitude towards doing business.

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