Twitter’s New Ad Move: And What Comes Next

Twitter just announced that it’s no longer letting its users push their own sponsored tweets. It’s about time. I’m not opposed to sponsored tweets (quite the contrary, actually), but I see Twitter’s decision as a business necessity, and I’m glad the company is in the right frame of mind.

For a long time, Twitter was a great place to generate revenue … as long as you weren’t Twitter. I wrote about this several times for DailyFinance and BloggingStocks. Plenty of companies, especially those in the media sector, were including Twitter in their advertising deals, which opened up a new revenue stream for them.

At the time, I applauded the approach. It was a clever way to fill the till. And, Twitter wasn’t doing anything with tweeted ads yet. It was a great way to fill a vacuum.

Last month, at the Chirp conference, however, Twitter unveiled its new advertising platform, bringing the company into direct competition with its users. Since Twitter’s spending the money to keep the operation running – and has an obligation to pursue a return for its investors – it gets priority. With its own ad model now up and running, it was wise for the company to give itself a monopoly on its own platform.

If I were one of the top dogs over at Twitter, I would make this the first step in a broader revenue play, not a one-time measure.

The next step is to take all that demand for third-party sponsored tweets and turn it into revenue for Twitter. To do this, Twitter should open its ad platform to its users. If the New York Times, for example, wants to continue to include its tweet stream in its ad packages, it would be great or the publication to be able to sell its clients’ ads through Twitter. He NYT would keep its revenue stream (though a bit eroded), and Twitter would get a cut.

Even better, Twitter would be engaging a subset of its user base to sell for the company. Twitter can only sell so much on its own without growing its sales force. But, if it offers a way for its media users to sell into Twitter, it can fill its ad avails faster without increasing headcount. This would be a revenue magnifier and accelerator, fueling even greater growth for Twitter, which I believe will turn its first profit this year.

This may already be in the works, and I wouldn’t be surprised to see it announced in the coming months. If allowing users to resell ad space isn’t part of the plan right now, Twitter should think about adopting it. In its hunt for revenue, there’s more money to be made … by letting other people do the heavy lifting.

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