Twitter to Tap into Advertising, Convert Growth into Revenue

Posted 04/13/2010 at 6:05am | by Paul Lilly

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Twitter's challenge has never been about finding users. According to comScore, the microblogging service had 22.3 million unique visitors in March, an increase of 524,000 from one year ago. And that doesn't even include the millions of users who access Twitter from third-party smartphone and Web applications.

The challenge, then, has been about turning those usage numbers into revenue. Twitter has so far relied on cash infusions from investors and some deals to license its stream of posts to Google, Microsoft, and Yahoo, but that's about to change. Twitter this week unveiled an advertising platform called Promoted Tweets, finally answering the question of how Twitter plans to turn a profit.

The way it works is users will see these Promoted Tweets when searching for keywords that advertisers have purchased to link to their ads. A handful of companies are already on board with this, including Best Buy, Virgin America, Starbucks, and Bravo.

"The idea behind Promoted Tweets is that we want to enhance the communications that companies are already having with customers on Twitter," said Dick Costolo, Twitter's chief operating officer.

These ads will appear at the top of the search results, even if it was written much earlier, and in small type. Roll over the message and the post will turn yellow. Companies will also be able to enter the conversation should things take a turn for the worse. For example, a movie studio could link to positive reviews if a flick is getting a negative reaction on Twitter.