For the past couple of years, bloggers and regular users from across the internet have wondered to themselves: how is Twitter ever going to make itself profitable? It doesn’t feature advertisements on any of its web pages, it doesn’t make it obvious how satisfied users can donate to the service, it doesn’t sell official merchandise – there is nothing on the Twitter website which specifies how it’s anything more to its executive team than an internet project. There’s nothing about it which brings in revenue, helps Twitter to sustain itself or pay its bills. Other than licenses that Twitter has with Google, Yahoo! and Microsoft, Twitter has never really taken advantage of the popularity of the site to earn revenue. Today, it seems as if we may have answers to this frequently asked question.

Twitter has announced today that it will be using Promoted Tweets, its own advertising program, to help bring cash into the site. In a way, it’s quite like the Google Ads concept: Twitter will display advertisements on pages which appear when its users search for keywords, and the ads which are displayed will be directly related to what that user is looking for on the site. This brings the idea of relevance into the picture; rather than displaying random ads which can be completely hit and miss, with no true likelihood that the user would be interested in what the ad has to offer, displaying ads which are catered for what that particular Twitter user is interested in means there is a better chance that person would be compelled to click the ad, and therefore make Twitter money.

Companies who want to advertise on Twitter will purchase the rights to have their website linked to from a particular set of keywords. Twitter has already announced that it has the support of huge industry players including Virgin America, Starbucks, Best Buy and Bravo. The Chief Operating Officer at Twitter, Dick Costolo, has said that the aim of Promoted Tweets is to help “enhance the communications” that companies today already have with their customers by using Twitter. Many international companies and celebrities use Twitter to help keep their customers, clients and fans up to date with their operations and what they’re up to, and so it’s true that this medium would help to extend those relationships even further. Linking in the updates that companies make on Twitter, and they’re ability to advertise to a wider capacity on the site, I personally believe that Twitter has developed a good first idea for how to make a sustainable and profitable business model.

The New York Times reports that the way the advertising program will work means that companies can get better advertising coverage on Twitter rather than just posting promotional information through its feed. The NYT uses the example of Starbucks – although the company does put out details about promotions and business updates on its Twitter feed for its users, anybody who searches for ‘Starbucks’ on the site is unlikely to see the update unless they are following Starbucks, because the continuous and frequent updates by other people using the word ‘Starbucks’ will push the official tweet from the recent tweet list for that keyword. In effect, updates from companies are being dragged away by the regular user who tweets about their day, and Starbucks is a popular choice for those who want to boost their caffine levels. Twitter has revealed that by using Promoted Tweets, searching for the word Starbucks, for example, will mean that Starbucks’ tweet is displayed at the top of the keywords page, regardless of how old it is, until Starbucks updates again. This is a somewhat more effective, lasting method of getting a message across and advertising a service than making a tweet update which will be washed away within a matter of seconds.

Advertisers will be charged per one thousand people who see the Promoted Tweet, and Twitter says the next step in the advertising program is to start incorporating the Promoted Tweets into the live update feeds that users see when they log into their account, regardless of whether or not they follow the updates of that Twitter account or whether or not they perform a search for any keywords. They are, however, deliberating how that would work: would ads be displayed depending on what the user tweets about most often, and are therefore usually show an interest in, or where they are located.

Today, I believe the only true way of making substantial amounts of money on the internet is to use an advertising program. It’s not just that I believe it, but it’s quite frankly proven fact. That is the only true way that companies such as Google, Yahoo!, AOL and MSN actually bring in any money – the services that they provide to you are, for the most part, completely free. Therefore, they are forced to place advertisements everywhere, on their and other people’s websites. The more interesting services they offer, and the more people they bring to the site, the more money they will make through their ads. Any website that offers a free service or does not sell a product will include ads, and that’s why Twitter has baffled so many people for so long. They’ve never used ads, and so they have never had a true opportunity to make any cash from their operatons. But today, with this announcement, we finally know how Twitter is going to support itself – and I’m sure, with this well-thought out and effective ad program, they are going to be a very profitable company, given how many people now use the service. Growth has been massive, but revenue has been nothing, and that is what this program will change.

Very quickly, the sentiment on Twitter for “Promoted Tweets” is largely negative: as I explained about, I cannot think of another way how Twitter would possibly make any substantial amounts of money, and you can’t blame a website for supporting itself. So people do not like ads, but they cannot expect Twitter to go on providing them with a free service for the rest of their life without Twitter making something out of it. Don’t worry: you’re not being asked to pay to use the service, unless of course, that’s what you really want.

Do you think that this is an effective way of earning money for Twitter? Do you think that the ads will be disruptive, or do you think they will be helpful to you, supporting you in finding services and information that you want to know about? Do you think that this is a well-planned ad program? Are you considering advertising your company or Twitter page using the Promoted Tweets concept from Twitter? Do you have anything else to say? Your comments are always welcome, just leave a comment.

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