Twitter's new flight path

In an attempt to cash in on its popularity, the micro-blogging site is launching 'promoted tweets', unleashing branded adverts on its 70 million users for the first time

Very impressive, yes, well done – but how are you going to make any money? It is the question asked of the founders of every social networking site, from Friendster to MySpace, YouTube to Facebook and, most recently, the enfant terrible of the industry, Twitter.

And now, Twitter has come up with – part of – an answer. Here's the announcement, in less than 140 characters, of course: "Promoted Tweets, the unveiling: More info to come later this week @chirp. Stay tuned!"

It may be only one small step for mankind, but it is a giant leap for the micro-blogging service. Twitter's founders have spent several years disparaging the idea of allowing paid-for adverts to appear among the never-ending stream of great thoughts and mundane details, breaking news and distracting links. Yesterday, they caved, hoping to wring some value out of the company's 70 million-strong user base.

The ad industry appeared underwhelmed, at least for now, but several prominent brands said they have signed up to the experiment. Twitter users can now expect to see ads for the airline Virgin America, new movies from Sony Pictures, and for Starbucks and Red Bull from today onwards.

Twitter's monthly user numbers increased tenfold last year, leading founders to argue that the company was better off letting the site grow before introducing anything that might distract users. But things have evolved in the past few months. The company's venture capital investors, who put in $100m last autumn in a fundraising that valued Twitter at $1bn, are agitating for a return on their money, and a new chief financial officer – Ali Rowghani, from the animation studio Pixar – arrived at the company last month.

Rumours have swirled that Twitter has been examining introducing subscription fees for some users, or ways to sell access to data about the 50 million short messages that flow through its pipes each day. In the end, though, it has plumped for something entirely conventional: a system similar to the one operated by Google, which allows advertisers to bid for keywords and then see their ads appear alongside search results when users type in that word.

Biz Stone, one of Twitter's co-founders, said "promoted tweets" from advertisers will start appearing on top of the list of tweets that appear when a user searches for a particular topic. At the moment, advertisers will be charged for the number of times the ad appears; eventually, they could be charged only if users share or click on them. With online advertising rates consistently proving disappointing to media companies hoping to profit from the web, it remains unknown how much revenue Twitter might derive from promoted tweets.

"Stubborn insistence on a slow and thoughtful approach to monetisation – one which puts users first, amplifies existing value, and generates profit – has frustrated some Twitter watchers," he wrote on the company blog. "Believe me, when your name is Biz and you're a co-founder of Twitter, it also means putting yourself at the mercy of folks like [comedian] Stephen Colbert who hit home runs with lines like, 'So, I assume that 'Biz' in 'Biz Stone' does not stand for 'Business Model'."

The explosive growth of Twitter was the media story of last year, as it appeared the service was morphing into something big – even though it was far from certain what. It is still not certain. Many users sign up out of curiosity, never to regularly tweet. Most use it as a way to share details of their lives with a small number of friends, or to post interesting links. But from stories such as the American Airlines plane that crashed in the Hudson River, to the street protests in Iran, the service also last year proved its worth as a place to break news. By the end of 2009, Google and Microsoft's search engine Bing had paid a combined $25m for the right to pull the Twitter feed on to their own search sites, so that breaking news would appear more quickly in search results. Twitter seemed the very definition of the "real-time web", the buzz phrase of the year.

And many companies are already using it for marketing purposes, building a list of followers to whom they tweet information or respond to criticism.

Eden Zoller, principal analyst at research firm Ovum, said the medium is double-edged. "Twitter has great potential as a marketing and advertising channel with opportunities to create viral buzz around a product or service, encourage customer interaction, and respond more quickly to customers and issues. But the flip side of Twitter's immediacy is that if advertising messages are not very carefully positioned, users can hit back at brands and in real time, and brands will have little control over this."

The question, says Andrew Frank, advertising and marketing analyst for the research firm Gartner, is whether they really need to pay for "promoted tweets".

He said: "I am not convinced that the value of Twitter is self-apparent. It has taken centre stage in the media world as a channel where news is broken and where celebrities share their inner thoughts. The revenue model, though, is pretty elusive. The size of the opportunity on Twitter is bound by the size of the audience. It is large and it is growing quickly, but it is still much smaller than Facebook and much less so than Yahoo or Google.

"The central question is whether Twitter's promotion of the ads, as measured by brand lift or resonance or whatever the advertiser is looking for, will actually be worth more to an advertiser than simply putting their resources to cultivating a persona and an audience on Twitter in the same way they do now."

All sides agree, however, that yesterday's announcement of promoted tweets, timed to coincide with the AdAge Digital conference in New York, is not the final word on a revenue model for Twitter. Rather, it is the first step in a much larger process of figuring out what works. The company already says that promoted tweets that don't "resonate" with users will be taken down, putting pressure on advertisers to come up with 140-character blasts that twitterers want to share or click on. In the end, they could be placed not just on search results but on users' main Twitter page, whether or not they want to be following Sony, Virgin America et al.

This immediately raised a red flag for Gartner's Mr Frank: "We're a long way from this at the moment but it's not inconceivable that, if your Twitter stream starts to resemble spam, you are going to tune out pretty quickly."

Favourites: The web money-spinners


Rupert Murdoch once dismissed the idea that Facebook could be worth $15bn, saying the social networking leader was a utility "like the phone book". That valuation, put on the company when Microsoft invested in 2007, looked bubbly back then – when it remained unclear how it could bring in substantial revenues. Last September, though, the company said it had started bringing in enough money to cover its costs, a year ahead of schedule, and its revenue is rumoured to be on course to top $1bn this year, thanks to its status as one of the most popular sites on the web. It makes money, like most sites, mainly from selling ads – both to brand advertisers and to smaller users, who can build their own ads to appear on targeted Facebook pages. It also makes money selling "virtual goods", such as birthday message icons.


The video-sharing website was one of the pioneers of the Web 2.0 era, a 24-hour version of You've Been Framed that has morphed into one of the biggest entertainment websites on the web. Google, which purchased the company for $1.65bn in 2006, does not break out financial details for YouTube, and executives are fond of expressing patience about how the subsidiary will find its way to profitability. Google has been aggressively expanding the number of adverts that appear alongside – and now also within – the videos on the site, with a resulting upswing in revenue, according to Wall Street guesses. Mike Mahoney of Citigroup has predicted that YouTube's share of the revenue from those adverts (it has to share some with copyright holders) could top $600m this year.


Facebook proves that scale matters in social networking, as advertisers flock to the most popular portals. This is why there is something of a crisis atmosphere at MySpace, which is on to its third senior management team in the space of a year. Mr Murdoch's News Corporation has owned the site since 2005, but revenues have fallen short of the old mogul's hopes as users have drifted away. Google signed a deal to sell advertising alongside search queries typed into the site, and guaranteed MySpace $900m over three years, expecting high traffic. But the actual results have been so poor that, under the terms of the contract, MySpace won't get all of that money. The deal expires this year, leaving MySpace casting around for additional revenue streams.

Shoppers at Selfridges department store in central London

Jeremy Paxman has admitted he is a 'one-nation Tory' and complained that Newsnight is made by idealistic '13-year-olds' who foolishly think they can 'change the world'.
peopleFormer Newsnight presenter is being touted for a brand new role
Michael Buerk in the I'm A Celebrity jungle 2014
File: David Cameron offers a toast during a State Dinner in his honour March 14, 2012
voicesAnd nobody from Ukip said babies born to migrants should be classed as migrants, says Nigel Farage
Arts and Entertainment
Avatar grossed $2.8bn at the box office after its release in 2009
filmJames Cameron is excited
Arts and Entertainment
Stik on the crane as he completed the mural
Happy in his hat: Pharrell Williams
Arts and Entertainment
Stella Gibson is getting closer to catching her killer
tvReview: It's gripping edge-of-the-seat drama, so a curveball can be forgiven at such a late stage
Brazilian football legend Pele pictured in 2011
peopleFans had feared the worst when it was announced the Brazil legand was in a 'special care' unit
i100(More than you think)
Brendan Rodgers seems more stressed than ever before as Liverpool manager
FOOTBALLI like Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
ebooksNow available in paperback
The Magna Carta
archaeologyContemporary account of historic signing discovered
Phyllis Dorothy James on stage during a reading of her book 'Death Comes to Pemberley' last year
peopleJohn Walsh pays tribute to PD James, who died today
Benjamin Stambouli celebrates his goal for Tottenham last night
Life and Style
Dishing it out: the head chef in ‘Ratatouille’
food + drinkShould UK restaurants follow suit?
peopleExclusive: Maryum and Hana Ali share their stories of the family man behind the boxing gloves
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Argyll Scott International: Service Desk Analyst

£20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

Argyll Scott International: 2x Service Desk Analyst

£20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

Recruitment Genius: Senior Execution Trader

£30000 - £250000 per annum: Recruitment Genius: A global Rolling Spot FX, Comm...

Citifocus Ltd: ACA - Financial Reporting

£Attractive Package: Citifocus Ltd: Chartered accountant (ACA or CPA), must be...

Day In a Page

Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

Christmas Appeal

Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

Is it always right to try to prolong life?

Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

What does it take for women to get to the top?

Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

Knitting pretty: British Christmas Jumpers

Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

French chefs campaign against bullying

A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

Just what you need on a New Year hangover...

Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
Cuba set to stage its first US musical in 50 years

Cuba to stage first US musical in 50 years

Claire Allfree finds out if the new production of Rent will hit the right note in Havana
Christmas 2014: 10 best educational toys

Learn and play: 10 best educational toys

Of course you want them to have fun, but even better if they can learn at the same time
Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

Paul Scholes column

I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

Lewis Moody: Lancaster has made all the right calls – now England must deliver

So what must the red-rose do differently? They have to take the points on offer 
Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game