Twitter struggles with viable advertising model

Posted by Lydia Leavitt

Twitter, the social networking site often mentioned alongside Facebook, has a fairly new business model when it comes to advertising. Last year, the company introduced its paid advertising model, "Promoted Tweets," and less than a year later, the company is playing it down.

Twitter CEO Dick Costolo is now telling ad buyers that if they want to buy a Promoted Tweet, they should instead purchase a Promoted Trend or Promoted Account.

Promoted Tweets are ads that run inside a users’ Twitter stream and show up based on search terms. The ads are disguised as tweets and show up in search results alongside non-sponsored tweets.

The problem with Promoted Tweets is that enough people don’t use Twitter as a search engine to justify a buyer purchasing the ad.

“It’s a powerful ad, but it doesn’t scale,” says one ad buyer.

Buying a Promoted Trend on the other hand solves the problem of scalability since users who click on the trend filter tweets to show all search results.

For example, if you click on a Promoted Tweet called “Super Bowl 2011,” you will see a Promoted Tweet pushing the event. It’s about the coupling, rather than the Promoted Tweet alone.

Twitter’s instructional video for ad buyers says that buying a Promoted Tweets and Accounts will help marketers "turbocharge" results, but it’s still unclear if it’s actually a viable marketing channel.

Twitter’s long-term solution to the search inventory problem is its plan to run Promoted Tweets in a users’ main timeline on Twitter.com. With that implementation, the company should have more real estate to sell.

(Via MediaMemo