Twitter unveils ad plan in profit push

Twitter, which has seen explosive growth since its launch four years ago, unveiled a plan on Tuesday to use advertising to turn its massive popularity into profit.

Biz Stone, one of the three co-founders of the micro-blogging service, provided details of the long-awaited revenue-generating plan for the San Francisco-based startup in a post on the Twitter blog.

Stone said the advertising service, called "Promoted Tweets," will allow companies and others to place the 140-character-or-less messages known as "tweets" at the top of a page of search results.

"Promoted Tweets are ordinary tweets that businesses and organizations want to highlight to a wider group of users," Stone said.

He said a number of companies, including Best Buy, Bravo, Red Bull, Sony Pictures, Starbucks, and Virgin America, had signed up to take part in the first phase of the advertising program.

Stone acknowledged that Twitter has been slow to add a money-making aspect to the service, which has received tens of millions of dollars in funding from venture capital firms since its launch in August 2006.

"Over the years, we've resisted introducing a traditional Web advertising model because we wanted to optimize for value before profit," Stone said.

"Stubborn insistence on a slow and thoughtful approach to monetization - one which puts users first, amplifies existing value, and generates profit has frustrated some Twitter watchers," he admitted.

Stone said sponsored "tweets" would be featured at the top of Twitter.com's search results pages so they would not get lost in the stream of messages that flow into the accounts of Twitter users.

Only one "promoted tweet" would be displayed per page. A sponsored message from Starbucks, for example, would appear at the top of a search results page for a user who searches for Starbucks or a related word.

"Promoted Tweets will be clearly labeled as 'promoted' when an advertiser is paying," Stone said, adding that "relevant" sponsored messages may eventually be integrated into a user's personal feed.

This would represent a major departure for Twitter. Currently, a user's account only receives messages from people they actively choose to follow.

Analyst Douglas McIntyre of 247WallSt.com said Twitter's venture into advertising is "likely to anger some who worry about privacy and behavioral targeting of marketing messages."

"Members may even attack the new advertisers, making the move counter-productive," McIntyre said.

But Forrester analyst Josh Bernoff said he did not expect a backlash. "People will not desert Twitter for this," he said. "It's inevitable - technology services need revenue."

Bernoff estimated the new ad service could provide Twitter with 100 million dollars in revenue a year while McIntyre put the figure at 150 million dollars to 200 million dollars.

Stone said "Promoted Tweets" would need to "resonate with users" to remain anchored at the top of a page.

"That means if users don't interact with a Promoted Tweet to allow us to know that the Promoted Tweet is resonating with them, such as replying to it, favoriting it, or retweeting it, the Promoted Tweet will disappear," he said.

Stone said that "Promoted Tweets" would only appear for the moment in search results on the Twitter.com website or in the accounts of Twitter users who are signed up to receive updates from a particular company or organization.

Eventually, however, they will be allowed to be shown in the many applications for using Twitter made by outside software developers.

Twitter has allowed Google, Microsoft and Yahoo! to index "tweets" in their search engines for an undisclosed sum of money but the new advertising service is the company's first serious money-making venture.

Twitter does not release figures on its total number of users but they are estimated to be in the tens of millions and the company said recently its users are creating 50 million messages a day.