Twitter ads introduced

Twitter users are to see
advertising on the site for the first time, as the microblogging service
unveils a much-anticipated plan to transform itself into a profitable business.

The four-year-old company will
today announce a new service called Promoted Tweets, which will allow
businesses to buy keywords. “Tweets” written by the company will then appear at
the top of the page when a user has searched for that word, much like on
Google.

The adverts, which will be limited
to 140 characters like all messages on the site, will only show up in search
results. This means users who do not search for something will not see them in
their regular Twitter streams. Over time, they may appear in the stream of
posts users see when they log on.

Twitter co-founder Biz Stone said:
“It’s non-traditional, it’s easy, and it makes a ton of sense for Twitter.”

Starting today, Twitter will reveal
the first adverts to around 10 per cent of users. They will include “tweets”
from companies such as Starbucks, Virgin America and Best Buy, the electronics
retailer.

The move comes a day ahead of
Chirp, Twitter’s developers conference in San
Francisco.

Although Twitter was recently
valued at $1 billion (£650.8 million) and has around 45 million regular users,
it made almost no revenue until it began selling real-time search results to
Google in December. The promoted tweets system has the potential of creating
profits for the company and its investors, who have pumped $160 million into
the company over the past four years. The number of elite venture capitalists
including Union Square Ventures, Institutional Ventures Partners, Benchmark
Capital and Spark Capital have significant stakes in the firm.

In contrast, Facebook is predicted
by some analysts to make around $1 billion in revenue this year.

Facebook has 400 million users and
already has demographically targeted advertising, based on information from the
user’s profile

In the past its founders have said
they wanted to concentrate on growth and not alienate account holders. But in
September, the site amended its terms of use which paved the way for
advertising. It has also made deals with search engines such as Google and
Microsoft’s Bing, thought to be worth millions a year, to include tweets in
their “real time search” offerings. Twitter is also expected to announce
“professional accounts”, which would give added features to paying users, which
could be another potential source of revenue.

Twitter has been testing the new
advertising system for months. Dependent on the system’s success, it hopes to
build a model based on “resonance” — where an ad will stay in Twitter’s system
as long as other users click on the link and pass it around the site. This way
it hopes only relevant advertising will appear prominently.

Analysts welcomed the move, but
warned that if the new advertising was implemented poorly, it would risk
alienating users. The technology commentator John Battelle said: “Twitter’s new
ad platform will mark the first time, ever, that users of the service will see
a tweet from someone they have not explicitly decided to follow. And that marks
an important departure for the young service. One that I think is both
defensible, and, if done well, could be seminal to both Twitter and to its partners.”

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