Search Marketing Insights (Emerging Search Trends)
Twitter Begins a Revenue Model
By: Jamie Keaney, Senior Search Strategist
After much speculation and criticism, Twitter announced plans for generating revenue from their 30MM+ user base. The lack of a revenue stream has long been the elephant in the room in discussions about whether Twitter is a fad or the real-deal. It appears that Twitter has attempted to answer that question, so long as marketers buy into the model.
Many brands have claimed their own handles (usernames) on Twitter in an effort to create one-on-one relationships with their customers. Those brands now have the opportunity to purchase “promoted tweets”.
The model is rather simple and closely resembles Google’s ad model. Marketers bid on keywords that trigger their promoted tweets to appear at the top of search results when a user queries that keyword. These tweets are labeled with a small icon labeled “promoted tweet.” Starbucks, Red Bull and Virgin Airlines are among the first advertisers taking part in the CPM-based ad program. In the coming months, Twitter plans to expand this CPM model into an ROI-based pricing model. Take a look at the example below:
The keyword bid won’t be the only deciding factor in placement of promoted tweets. Just as Google has a quality score, Twitter has created a “resonance” score. Resonance will be determined by a number of factors, among them are the number of followers a brand has, the number of times the promoted tweet is “retweeted,” the number of replies the tweet receives, the use of hashtags and the number of clicks the hashtag or link included in the tweet receives. If the promoted tweet does not have a strong resonance score, it is dropped as a promoted tweet and pushed into the normal stream of tweets, in which case the advertiser will not pay for it.
Promoted tweets represent phase one of Twitter’s plans to generate revenue. The next phase includes quickly expanding promoted tweets from only Twitter search results to their syndicated partners such as TweetDeck and HootSuite.
The second component of Twitter’s revenue stream will come in the form of commercial accounts. Commercial accounts will allow marketers access to advanced analytics and more API access to help manage the accounts and gain insight into the analytics. That service is expected to be rolled out late this year.
So what should marketers do about promoted tweets? Dick Costolo, COO of Twitter, says many marketers that he has spoken with are taking a ‘wait and see’ approach while dipping their toes into promoted tweets.
There are still many unanswered questions. Twitter isn't exactly sure just yet if the model will generate the revenue they expect, if marketers will embrace it, or if users will accept the new forms of advertising.
Twitter has taken a good step in introducing a quality score on top of a bidding platform, but it remains to be seen whether promoted tweets will be accepted – or at least tolerated – and not seen a nuisance to users. Marketers testing promoted tweets should keep a watchful eye their lists of followers, in the event that promoted tweets are seen as annoying enough to prompt un-following. It will take some time to learn how users will react the promoted tweets and if users treat them the same as normal tweets.
Certainly for marketers who are open to pushing the boundaries of brand exposure on social networks, promoted tweets are worth trying. Allocating a small budget to the idea, as many brands did initially with Facebook ads, is likely enough to gauge successfulness.