Twitter decides to sell advertising

Can Twitter make money? That simple but vital question has dogged almost every exciting internet business of the last 10 years. An earlier blog from last September described how Facebook makes a profit. Now Twitter is out to prove that they can too. An article from The Economist tells the story, which is outlined in brief from here.

The firm has just unveiled a long-awaited advertising scheme that it claims could mint money for the company. The business has long concentrated on scooping up users for its service, and money from venture capitalists rather than on finding a way to make profits from its growing audience. Now it needs to show that these investments have been justified.

Some social-marketing experts claim that the nature of Twitter’s service, which involves communicating via 140-character “tweets”, makes it tricky to generate revenue. Twitter’s bosses disagree, but are treading carefully. For now, they are only letting advertisers such as Starbucks and Virgin America, an airline, place so-called “promoted tweets” at the top of results lists on the service’s search engine. This is similar to Google’s sale of ads based on keywords in searches. Those that are not popular with Twitter’s users will be removed.

Alarmed at this prospect, some users have already urged Twitter not to “pollute” their thoughts with ads and have threatened to leave if it does. Yet unless there is a mass revolt in the coming months, it is almost certain to press ahead.

Could this be a massive money-spinner? Some critics point out that ads on Google command premium rates because its users are often looking to make a purchase. Twitter’s audience, they say, is less likely to be shopping, and will thus be less prized by advertisers. Twitter’s chief operating officer, disputes this, arguing that people often use it to search for, say, immediate reactions to product launches.

Facebook remains Twitter’s main rival. It will shortly be revealing more data that is likely to make it even easier for people to establish connections with other websites and to pull information from elsewhere back into Facebook. With such a formidable foe, Twitter needs all the friends—and advertisers—it can get.