There has always been advertising on Twitter, even if Twitter didn’t make any money from it.

Almost as soon as the service launched, users realised that they could use status updates to promote other longer form content, time sensitive special offers, or general sales.  The challenge was that you either had to build a significant interested market to communicate with, or use some automated technology to identify users who weren’t following you, and then hit them with a message promoting something when they tweeted an appropriate trigger phrase.

The problem for Twitter with that kind of model was simple:  They made no money from it.

Over the past couple of years, Twitter have gradually taken steps to address this.  They took away Basic Authentication and required apps to be registered, which reduced a lot of the spam that was flooding Twitter.  Then they began to roll out their own advertising solutions:  Promoted tweets, promoted followers, and promoted trends, which to be fair haven’t exactly set the world alight, and aren’t always that well targeted – I’m in the UK, and I’m being targeted with promotions about Verizon, which isn’t available.

The launch of their new Geo-specific advertising will make a big difference to marketers, and comes on the back of other advertising opportunities from Twitter.

It’s always been possible to create the impression of a branded page on Twitter simply by designing an attractive back ground image that inlcudes the logo of your business to give it a consistent look and feel with the rest of your properties.  The still-to-be-confirmed brand pages should  offer a lot more functionality for advertisers along with access to a dashboard of  information about followers to help with targeting.

The idea of being able to geo-target users with specific messages should improve on situations like the one I mentioned above, where I’m seeing adverts for Verizon which are of no use to me.  They should also allow for integration of offers such as Groupon into Twitter, and increase the number of time sensitive deals.

With Geo-Targeting, I could tweet about wanting a coffee when standing in a city, and then receive time sensitive offers by return based on where I was standing.  It’s the type of direct response advertising that was in Minority Report, and an example of how an always on social media platform combined with GPS and a smart phone can be used to create a highly personalised offer system.

It’s compelling.

Of course the biggest challenge for Twitter will be to convince advertisers of the value of this approach.  At the time they launched Promoted Trends in 2010, Twitter had around 6 advertisers.  This has grown over a year to around 600, but advertising revenues are still very low: according to Mashable, Twitter’s revenue from advertising for the whole of 2010 was just $50 million, compared to $1.8 billion from Facebook.

Twitter is also going to have to face up to the fact they need to create a paradigm shift amongst advertisers similar to that which Google went through in 2000 when Google launched Adwords.  Before that, advertisers were used to the idea of search traffic from Google being free, all of a sudden, it cost money.  Brands and businesses that use Twitter to promote themselves have typically done it for “free” – given the cost of building a community of followers and investing in their influence.

Now, the landscape is changing.  there will still be value in a community, but there will be the ability to fast track to an influential status through advertising budget.  It’s a very similar situation to the one of PPC and SEO in search.

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