Battle Lines Being Drawn Over Twitter-Based Ads

A battle appears to be brewing over the promise of monetizing Twitter and, more specifically, over the placement of ads on the Twitter platform.

NOTE: See our follow-up post to this article, FAQ: Twitter’s New Rules On Third-Party Ads

In a lengthy blog post today, Twitter’s Chief Operating Officer, Dick Costolo, announced that the company will not allow third parties to place ads in the Twitter stream — something that Twitter’s own Promoted Tweets already does.

It is critical that the core experience of real-time introductions and information is protected for the user and with an eye toward long-term success for all advertisers, users and the Twitter ecosystem. For this reason, aside from Promoted Tweets, we will not allow any third party to inject paid tweets into a timeline on any service that leverages the Twitter API.

As a reminder, Twitter’s Promoted Tweets is essentially AdWords for Twitter content. Companies pay to have their tweets appear at the top of some Twitter.com search results pages. In its announcement, Twitter emphasized that these “will first exist as regular Tweets and will be organically sent to the timelines of those who follow a brand.” Below is a Promoted Tweet appearing today on searches for “starbucks.”

Twitter, of course, is not alone in trying to monetize the Twitter stream. Several companies already sell ads in association with content they get from the Twitter API. OneRiot, for example, sells ads around Twitter content (and other real-time content) via its RiotWise service.

And earlier today, TweetUp announced that its paid Twitter search engine is now open for business. TweetUp search is currently only available through a widget appearing on TweetUp.com and a couple partner sites, but will eventually be available on more sites and in several Twitter software clients (like Seesmic and Tweetdeck).

For now, TweetUp’s widget is only showing recommended Twitter users. But, when TweetUp adds paid tweets, it will be offering the same kind of service that Twitter’s Promoted Tweets does — Twitter content turned into advertising.

So, did Twitter just kill TweetUp (and RiotWise, and others) with today’s announcement?

Not necessarily. TweetUp’s Bill Gross told Peter Kafka today that he believes the new Twitter policy won’t impact what TweetUp is doing because TweetUp isn’t placing ads in the Twitter stream, but into Twitter search results.

And in his post today, Costolo did say that Twitter is not closing the door to all Twitter-based ads:

We believe there are opportunities to sell ads, build vertical applications, provide breakthrough analytics, and more. Companies are selling real-time display ads or other kinds of mobile ads around the timelines on many Twitter clients, and we derive no explicit value from those ads. That’s fine. We imagine there will be all sorts of other third-party monetization engines that crop up in the vicinity of the timeline.

Ultimately, what’s allowed and what’s not may depend on how Twitter defines that last bit above: “in the vicinity of the timeline.” Costolo says Twitter will release its new Terms of Service “shortly.” No doubt that TweetUp and the several other companies trying to monetize real-time content — largely via Twitter’s API — will be reading closely.

Postscript: As promised, Twitter has now updated its API Terms of Service to reflect this new policy. Here’s the relevant section:

2. Advertising Around Twitter Content

(a) We encourage you to create advertising opportunities around Twitter content that are compliant with these Rules. In cases where Twitter content is the basis (in whole or in part) of the advertising sale, we require you to compensate us (recoupable against any fees payable to Twitter for data licensing). For example, you may sell sponsorships or branding around gadgets or iframes that include Tweets and other customized visualizations of Twitter. Please contact us for questions and information at [email protected], or to notify us of an advertising opportunity.

(b) You may generally advertise around and on applications or sites that display Tweets, but you may not place any advertisements within the Twitter timeline on your Service other than Twitter Ads.

(c) Your advertisements cannot resemble or reasonably be confused by users as a Tweet.

(d) You may advertise in close proximity to the Twitter timeline (e.g., banner ads above or below timeline), but there must be a clear separation between Twitter content and your advertisements.

I’m not a lawyer, but it seems to me that item “C” above could be a problem for TweetUp. Its paid Twitter search results could be said to “resemble or reasonably be confused by users” as tweets.

Postscript: See our follow-up post to this article, FAQ: Twitter’s New Rules On Third-Party Ads

Postscript, May 26: In a new blog post, TweetUp says: “We completely comply with the new terms of service and we look forward to working with Twitter and all of our partners to enhance the Twitter ecosystem.”