Twitter’s rumored Promoted Tweets are now official, launching only a day after the very similar TweetUp launched (will that be DOA?). Promoted Tweets has two phases, which might be described as an AdWords phase and an AdSense phase. The AdWords part is what is launching first.
Marketers buy keywords (for now on a CPM basis) and their ads show up at the top of Twitter searches as sponsored tweets. It’s paid search. And I can see the future SMX Advanced panel now: “Best Practices for Twitter Search Campaigns.”
Apparently Twitter has “huge” search volume, according to COO Dick Costolo, though no specific numbers were provided to AdAge. That may well be but they’re not yet huge enough to show up in comScore’s extended search rankings list:
Now for the AdSense part, which will reportedly come later.
Promoted Tweets will show up in users’ Twitter feeds (and in third-party clients) and probably be contextually and/or locally relevant. The company is going to be extremely careful about this part because of the spam and Facebook-style “user-outrage” potential. I’m sure that Twitter won’t blow it, however.
Predictably the proposed AdSense-like dimension of Promoted Tweets is causing some controversy among the punderati. But what’s striking to me is how obvious and largely uncreative these approaches are. Along those lines the prize for the best headline on this topic goes to GigaOM with “The Twitter Ad Model Revealed (What Were You Expecting, a Pony?).”
Google and Overture/GoTo before it made the world safe for paid-search advertising, which now constitutes the by far dominant component of online advertising revenues at 47 percent last year.
These business model choices that Twitter is making are both safe and proven. According to comScore figures quoted by the NY Times, “Twitter.com had 22.3 million unique visitors in March, up from 524,000 a year ago, and that does not include the millions more who use the service through third-party smartphone and Web applications like TweetDeck or Tweetie.”
Though Promoted Tweets will at first sell on a CPM basis, making more money for Twitter than CPC would, just for fun let’s do some CPC math.
Google’s revenues per search (RPS) have varied over time and have been estimated at 9.5 cents and 12 cents at different points. Google’s RPS are higher than the industry average. But lets assume 10 cents per query as a round number that Twitter might be able to get, which also assumes 100 percent fill rates.
Let’s say, using those figures and assumptions, that Twitter had 100 million searches per month (just under five searches for every Twitter user). That would translate into $10 million in CPC revenue on a monthly basis and $120 million per year. Nice numbers to be sure, but would that justify the billion-dollar valuation that the company currently has?
Postscript From Danny Sullivan: Lots for me to digest here on my first day back from a week’s vacation! I’ll probably be digging into this more myself in the coming week, but I wanted to jot a few observations:
How Big Is Twitter Search? As Greg notes, the amount of searches happening at Twitter is a big unknown and further complicated by a few things. Are you counting searches that happen only at search.twitter.com? Or across all of twitter.com? Do you include the API calls? And do you count the huge calls made by Google and Bing for searches?
What Does Twitter Really Control? Related to that, will Twitter be able to push Promoted Tweets out beyond the ecosystem that it controls? IE, can it put Promoted Tweets at the top of search results at Seesmic — especially with Seesmic seems to have a deal with rival third-party ad system TweetUp to let that company reshape Twitter’s results? And can Twitter reshape the results at its biggest distribution partner, Google (probably not).
Bye, Bye, The Pure Twitter Stream Pie: Today’s remarkable in that the “pure” Twitter stream is becoming a thing of the past. Sure, some individual have accepted payment for tweets. But now things are becoming more industrialized. We have both Twitter itself and a third-party company with some serious history in sponsored search results ready to inject paid content directly into personal Twitter streams. How will consumers react? Will they have options to opt-out? How will disclosure happen, especially across the varied Twitter ecosystem? What about tweets that get displayed in web pages? What happens when sponsored tweets lack nofollow around links, something that already happens in some distribution situations. Will Google complain this is paid link selling? Personally, by the way, I’m not overly concerned about the commercialization. I think it was inevitable and as with search, revenue can help to ensure you get a good quality service.
This Tweet Brought To You By The Letters F, T & C: What’s the US Federal Trade Commission going to think about all this? Last decade, the FTC was instrumental in defining how sponsored search results should be disclosed. Twitter, it its blog post, calls Promoted Tweets “organic” tweets and not ad:
Since all Promoted Tweets are organic Tweets, there is not a single “ad” in our Promoted Tweets platform that isn’t already an organic part of Twitter.
Hmm, I beg to differ. Sure, these might be “normal” or “organic” tweets in origin, but the fact of elevating them above other tweets is what turns them into ads. That’s the core of how the FTC defined search ads back in 2002:
Because search engines historically displayed search results based on relevancy to the search query, as determined by algorithms or other objective criteria, the staff believes that consumers may reasonably expect that the search results displayed by individual search engines are ranked in accordance with this standard industry practice – that is, based on a set of impartial factors. Thus, a departure from the standard practice, such as a search engine’s insertion of paid-for placements in the search list, may need to be disclosed clearly and conspicuously to avoid the potential for deception.
Thus, any Web sites or URLs that have paid to be ranked higher than they would be ranked by relevancy, or other objective criteria, should be clearly labeled as such using terms conveying that the ranking is paid for. In the staff’s view, to avoid deception such labels need to convey that the sites listed are placed higher, or otherwise presented more prominently, because they have paid for their ranking or position, rather than solely based on some objective criteria relating to the probable relevance of their content to any particular search request.
Now, Twitter is clearly labeling these, though it uses the language of “Promoted” rather than the far more common term of “Sponsored” that the major search players settled into after the FTC’s guidelines were issued.
Personally, I’d prefer the term sponsored. It’s what we’re used to in the industry. I wasn’t happy when Google started blurring things by using Promoted – then Sponsored — then Promoted again for ads at YouTube. I hate to see Twitter further add to confusion.
For more on this, see my past post, Google Experiments With Paid Inclusion & Does “Promoted” Meet FTC Guidelines?
In addition, John Battelle had some interesting thoughts on the commercialization of the Twitter stream. Over at OneRiot, they have an interesting post on how they’re six-month old system to place ads against real-time search results has been working. That system has sounded pretty impressive in concept, though the key challenge has remained picking up the volume.
Also see related news at Techmeme.