Despite some of the most rapid growth posted in web history, Twitter has a surprisingly low revenue stream. To fix this, the company is considering multiple ad format possibilities, including using the main tweet feed for promoted ads.
The New Twitter Ad Frontier
According to the Financial Times, Twitter is considering "introducing advertisements among the short messages that users see in the most active part of the social networking service." In brief, that would mean that promoted tweets – currently located in unobtrusive portions of the site and sometimes even missing from third-party services, like TweetDeck or HootSuite – would be integrated with the standard messages.
That means much higher visibility, especially if the promoted ads are "glued" to specific positions (e.g., there will always be an ad in the third position down). Considering the demonstrable habits of Twitter users when it comes to clicking on links, this model may work beautifully – if it doesn't cause a riot from users.
Other ad formats being considered include ads at the top of the tweet stream, and limited-time offers from companies who want to advertise (similar, if not quite parallel, to the Groupon concept). None of the ad models introduced thus far has had much success, and Twitter has been slow to implement self-serve systems.
The Future of the Tweet
Webmasters need to pay attention to Twitter's movements here, partially because the company's ad trajectory is unclear. Twitter has yet to commit to any course of action, despite repeatedly indicating that they plan to be "bold in the product decisions we make" and that the company is "always talking with marketers about ways they could potentially get more out of Twitter."
But what should Twitter actually do? The idea of avoiding anything that causes a user backlash is cowardly, and Twitter's claim that they will avoid anything that doesn't "improve the user experience or serve our mission" needs to be carefully evaluated. There's a long history of social media users whining about any change in their interface, even when the majority of users favored the new features.
It's already status-quo to have a clearly labeled advertisement section in the front and center of where users interact. Social media isn't just about being unobtrusive and allowing an open space, as beautifully idealistic as that is.
It's about establishing a revenue stream that lets Twitter pursue greater enhancements and spread in the future, while allowing advertisers to take more direct advantage of a powerful medium. While $100 million in revenue is great, Twitter can – and must – do better if it wants to stick around for the long haul.