Perhaps almost nothing.

According to Lenovo’s search marketing manager for Europe, the Middle East, and Africa, geo-targeted tweets are so powerful that they can drive better engagement and better sales than search. In a new Twitter case study published today, Andy Murray gave advertising on Twitter a ringing endorsement.

“The real-time quality of Twitter is brilliant. It lets you tap into exactly what your audience cares about most. There’s also real potential to drive action and have a strong sales impact with something like a fantastic offer or a giveaway. Twitter campaigns are also much more flexible. They allow you to make creative or strategic changes that you can’t with more traditional ad buys. Plus, geo-targeted Twitter Ads are powerful and can outperform search.”

That’s a big deal.

For Twitter, which is likely planning an IPO later this year, advertising and revenue is incredibly important. Already this year, Twitter has released a keyword targeting product, published an Ads API for major distribution partners, opened Twitter ads to all U.S. businesses, negotiated a $200 million ad deal with Starcom, and is rumored to be launching an automated ad exchange.

But the big kahuna in online advertising is, of course, Google.

Google pulled in $50 billion in revenue last year mostly due to ads, and — of course – controls the majority of organic search. Precisely because it controls both organic search and how a vast quantity of all online advertising interfaces with that organic search, Google has a great deal of power in the online ad space. Not to mention the best data about how organic search triggers clicks and ultimately sales — the so-called and much-coveted “intent graph” that social networks such as Twitter and Facebook have struggled to compete with.

But Lenovo’s use of both Promoted Accounts to get more followers and Promoted Tweets to get more visibility resulted in $27,000 in direct revenue, an almost 700 percent increase in brand mentions, and 2,576 new followers, Twitter says, over the course of several weeks. All of which added up to Lenovo’s Murray saying that Twitter ads can outperform search.

If that’s the case — and if Twitter can help businesses around the world replicate Lenovo’s experience — Twitter has a massive cash cow on its hands.

Initially, Promoted Accounts and Promoted Tweets didn’t come cheap. While the starting price used to be as much as $10,000 a month for promoted accounts, the price has come down as low as $1 per new follower. Similarly, Promoted Tweets started out without many controls on who they were promoted to, and initially required minimum spends of $15,000, but have since come much farther down, in some cases to pennies per tweet, and in most cases to dollars.

That means that prices are very competitive with Google Adwords prices, which can easily be $1-$10 in competitive categories … and that’s even before you take into account the potential long-term and viral impacts of new followers, retweets, and favorited tweets.

And that means that Twitter may really have something that can challenge Google’s ad supremacy.

Image credit: Twitter icons

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

After being available only to select businesses for about a year, Twitter Ads is now available to almost all U.S. companies that want to use it, Kevin Weil, Twitter Senior Director of Product for Revenue, said today at TechCrunch Disrupt NY.

Twitter’s ad platform is a self-service solution that lets advertisers buy Promoted Tweets and Promoted Accounts. The service gives brands a larger opportunity to get exposure to Twitter’s more than 200 million active users rather than simply pushing messages through standard tweets.

These ad products also let advertisers target users by geography, and they are offered on a pay-per-engagement basis. Offering these products to more businesses makes Twitter another powerful force alongside Facebook or Google in social advertising.

Photo via Sean Ludwig/VentureBeat

Balachandar Ganesh oversees research operations at Credii.

Twitter’s recent announcement of an Ads API hardly comes as a surprise. The rumour mills have been predicting this for nearly two years now, and with Facebook and LinkedIn already having made similar moves, it was merely a question of just when this was going to happen.

The move is widely being touted as a very wise one by Twitter — and for the right reasons. It enables Twitter to tap into the expertise of third party application developers with a proven track record of developing marketing platforms that help advertisers in launching, managing and optimizing their campaigns at scale.

Regardless of how big your advertising budgets are, Twitter’s Ads API and the value that it promises to deliver via third party ad solutions providers is unquestionable.

But how exactly will this impact marketers and marketing budgets? What tangible outcomes can advertisers expect from these third party ad solutions providers in the not so distant future?

Buying Twitter ad units just got easier

Balachandar Ganesh

Up until yesterday, the only way you could buy advertising real estate on Twitter was either off their basic self-service interface or from their direct sales team. Not only is this far from optimal, it is also extremely difficult to scale if you want to run frequent and multiple campaigns. There’s always been a demand for gaining more eyeballs on Twitter through advertising (Twitter sees nearly half a billion tweets on the platform every day!) and with this announcement, Twitter just widened the supply pipes.

The Ads API is a definitive step towards building a developer ecosystem similar to that of Facebook’s Preferred Marketing Developer program. As marketers, it gives you the flexibility to buy and manage Twitter ad units from a variety of developers, and arguably, do so easily and effectively.

Creating ad campaigns on Twitter just got easier

Creating and managing ad campaigns on Twitter was a labour intensive process — a process that couldn’t scale to meet the requirements of agencies and big brands. Consider an agency creating thousands of new ad units for their clients every day. These ads had to be manually uploaded, one by one. Editing these ad units, if you had to, was equally painful.

Running scheduled ad campaigns? Forget about it!

By tapping into the goodness of third-party tools like Salesforce Marketing Cloud, Adobe Marketing Cloud, GraphEffect from SHIFT and TBG Digital’s One Media Manager (and likely many more in the very near future), advertisers can now upload and edit bulk ads, and effortlessly create, plan and run ad campaigns like they do for Facebook or YouTube.

Reporting and analytics just got better

Twitter’s native ad analytics and reporting tools are, well, threadbare. Here’s a look at the entire repertoire of Twitter’s analytics for promoted tweets, trends and accounts.
Twitter doesn’t offer much apart from pretty basic metrics such as impressions, retweets, clicks, replies, and follows. Hardly enough to wet the lips of advertisers spending $200,000 per day on a promoted trend (yes, they’ve upped the price from the $80,000 they used to charge when it first launched).

Adding context to these metrics and enriching them with perspective that you glean from cross-channel ad campaigns is something that Facebook, LinkedIn and now, Twitter’s partner ecosystem is more than capable of delivering on.

You can squeeze more bang-for-your-buck with hyper targeting

Twitter barely offers anything in terms of targeting.

Since launching their promoted products suite, Twitter has offered businesses the ability to target by geography, by gender and only recently, by interest. There already is an impressive ecosystem of vendors that do some pretty neat stuff around generating in-depth audience profiles, like being able to suggest and rank individuals according to topic specific influence levels, or giving you a list of users similar to your target audience. As Twitter expands their Ads API partner ecosystem, marketing software vendors with a strong focus on analytics will be able to give marketers the ability to run highly targeted and highly contextual ad campaigns.

Want to run a promoted tweet campaign to get the attention of influential folks in technology, living in Palo Alto, and are unsatisfied Verizon customers? No problem!

You can finally expect data-driven real-time ad campaign optimization

The industry for tapping into the social web, mining for relevant conversations, and optimizing engagement is awash with hundreds of vendors catering to a wide array of requirements. In the process of adopting an ‘always-on’ approach in monitoring for trends or impending crises that could snowball into something disastrous, they generate a lot of real-time or near real-time insights. These insights can now be used to complete the feedback loop in optimizing ad campaigns at run time.

And maybe, just maybe …

Right now, the only engagement metrics on Twitter that are indicative of the success or failure of an ad campaign are retweets, @mentions and replies. You really can’t measure much else with promoted tweets, promoted trends and promoted accounts. However, Twitter is looking into newer ad units, giving advertisers more options to engage with their target audience.

The ad unit that Twitter is currently testing features an image with a ‘Get it Now’ button (see image below), giving marketers the ability to generate leads directly from Tweets. You can also expect Vine lending itself as a new, meaningful ad unit. 6 second videos on autoplay could very well be Twitter’s equivalent to Facebook’s rumoured autoplay video ads.

Whether or not Twitter chooses to roll out lead cards, it isn’t outlandish to suggest that Twitter will be rolling out newer, more complex ad units in the near future, enabling their partner ecosystem to deliver algorithmic, analytics- intensive, data-driven technology solutions so advertisers can increase the effectiveness of their Twitter campaigns.

Folks, Twitter marketing just got serious.

Balachandar Ganesh oversees research operations at Credii, an interactive web-based platform for business software selection. In his previous role as an enterprise software analyst at Ovum, Bala evaluated over a hundred enterprise technologies in depth and authored reports that helped businesses mitigate technology adoption related challenges. He also undertook a number of consulting engagements, advising companies ranging from garage startups to global multi-billion dollar firms. Bala is a graduate in Technology Policy from the University of Cambridge, where he focused on Internet Governance and Policy related issues.

Image credit: ShutterStock/Tweet bird

Twitter announced its new Ads API this morning, along with the first five partners who will be integrating it into their social media management tools. Essentially, agencies and enterprises who already use management tools like HootSuite and advertising tools like Adobe’s Media Optimizer can now buy and run ads right within those environments.

The first five partners are Adobe, HootSuite, Salesforce, SHIFT, and TBG Digital. SHIFT produces GraphEffect, a social advertising solution, and TBG Digital is social media advertising agency.

“What this means is that as marketers, you’ll soon have the ability to work with our initial set of Ads API partners to manage Twitter Ad campaigns — and integrate them into your existing cross-channel advertising strategies,” Twitter’s April Underwood wrote in a blog post.

More on HootSuite’s new Twitter ad tools here …

In a smart move for Twitter, while the partners will provide their clients the ability to advertise on Twitter from within their tools, when those clients become Twitter advertisers, they will be Twitter’s clients, not HootSuite’s, or Adobe’s, or SHIFT’s. In other words, the ad-buying arrangement is consummated via the Twitter API, and the contractual agreement is with Twitter itself.

“We’re setting the accounts up with Twitter,” HootSuite’s Ryan Holmes told me this morning by phone. “The validation is done on Twitter’s side.”

While Adobe, SHIFT, and TBG are ad agencies and marketplaces, and HootSuite is a social media management tool, one of the really interesting partners is Salesforce, which is again adding to its toolbox in a quest to offer everything any company needs for any purpose, within its cloud. The company is announcing a new Social Ads Platform for Twitter today, which will be part of the Salesforce Marketing Cloud, and likens Twitter’s move to the launch of Facebook’s app platform in 2007.

That might be a bridge too far, but it is a really pivotal move in Twitter’s evolution.

Which is ongoing, as Twitter’s Underwood wrote:

The Twitter Certified Products Program is also evolving to include ads products. In the coming months, we’ll begin to certify ads products that integrate with the Twitter Ads API and consistently improve marketing efficiency and ROI.

This is just the start of our efforts that will give advertisers more choice — and for our partners who are ad tool providers, the Ads API represents a new way for their expertise to meet the needs of their clients.

photo credit: x-ray delta one via photopin cc

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Between Black Friday and Cyber Monday falls … Small Business Saturday.

Yes, that’s actually a thing now: Created (and trademarked) by American Express in 2011, “Small Business Saturday” is an attempt to encourage people to do their holiday shopping at small businesses. It’s set for the Saturday after Thanksgiving. So after you go on a mall-shopping binge on Friday (or perhaps after you stay home knitting in observation of Buy Nothing Day), head downtown on Saturday and buy some stuff from local merchants.

And to help out, Twitter is offering $1 million in free ads for small businesses. The first 10,000 eligible businesses in the U.S. will get $100 in free advertising credits each, which they can use for promoting tweets or for promoting their own Twitter accounts. Nice, huh? You don’t even have to claim the credits this weekend — Twitter will keep the offer open until December 14. Click over here to apply for the program.

It’s a sweet gesture from Twitter to the vast engine of economic growth that is made up of America’s small businesses. But it’s also a canny promotional ploy for Twitter to call attention to its own advertising services, isn’t it?

But, let’s not be too jaded about this. After all, we’re talking about an imaginary holiday invented by a credit card company, but at least it’s one that might benefit some actual mom-and-pop shops.

Now, who wants to start a campaign for Startup Sunday?

Photo credit: American Express/Small Business Saturday

Twitter is testing the theory that advertisers want more than just campaign impression and click-through data to understand the value of paying to promote messages on the information network.

Today, the company announced a partnership with Nielsen that provides select brand partners with an in-tweet survey tool for polling Twitter users and measuring the impact of their campaigns.

The limited-release brand survey tool, currently available to a small set of advertisers, enables Twitter customers to create, publish, and share micro surveys to Twitter users in the same way they already use Promoted Tweets. The surveys appear in Twitter user timelines on web and mobile, and can be filled out from within the tweet.

“This is a native experience for the user, and we believe it will give brands better insights to determine purchase intent, overall awareness, and other advertising metrics and analytics that can lead to greater engagement on Twitter,” Twitter vice president of brand strategy Joel Lunenfeld said in a blog post.

Coincidentally, the measurement tool comes just days after Facebook began talking up a partnership with Datalogix. The Datalogix tool helps the social network’s advertisers better understand the impact of their campaigns and make the connection between Facebook ad impressions and store sales. Twitter is taking a completely different approach with surveys by helping advertisers get direct feedback from target audiences. Both methodologies, however, are meant to move marketers and advertisers away from thinking about the success of their social campaigns in terms of click-throughs alone.

Twitter said it would make brand surveys available to additional partners in early 2013.

Photo credit: BasBoerman/Flickr

Twitter has today launched interest targeting, incentivizing advertisers with 350 more reasons to pay to promote their tweets.

Interest targeting pivots around Twitter’s real-time interest graph and offers advertisers a way to target their messages to specific audiences by selecting from more than 350 interest-related categories. Offered interests include everything from specific life stages, particular pets, personal finance interests, style and fashion preferences, education levels, and movie and music genres.

Twitter’s two-level interest hierarchy is composed of more than 350 categories.

The information network lets advertisers choose their audiences by selecting interests from a two-level hierarchy, as pictured right.

“As an example, if you were promoting a new animated film about dogs, you could select Animation, under Movies and Television; Cartoons, under Hobbies and Interests; and Dogs, under Pets,” explained Kevin Well, Twitter’s director of product management.

Advertisers looking to slice and dice audiences more precisely can create custom segments by selecting a few Twitter usernames that are relevant to their products or services. By picking out a specific @username, the advertiser can reach people with similar interests to the Twitter user’s followers (though they can’t specifically target the person’s followers).

“This is a huge step forward for our advertising platform — it’s our biggest launch since Promoted Tweets in timelines late last year, and we’re excited to get it in the hands of advertisers,” a Twitter spokesperson said in a statement emailed to VentureBeat.

The release is so monumental for the information network that it’s gone to extremes to protect the value of its prized interest graph, or the machine powering interest targeting. Twitter recently cut off access to its graph to competitors such as Tumblr and Instagram.

Whoopsie. Proving that it’s always good to dot those i’s and cross those t’s, social media firm TBG Digital has amended a report that originally concluded that Facebook’s mobile ad click-through rate (CTR) is four times that of the mobile CTR on comparable Twitter mobile ads. Turns out the opposite could be true.

Twitter, TBG said Friday in a statement, actually sees an engagement rate between 1 and 3 percent for Promoted Tweets on the desktop. On mobile, click-through rates are even higher. Twitter confirmed to VentureBeat that those numbers are accurate but would not provide specifics on the mobile CTR for Promoted Tweets.

Now, compare the revised percentages to the 1.14 precent click-through rate for Facebook’s mobile ad units, which, we should note, is already significantly higher than the 0.083 percent CTR Facebook gets on desktop ads. What we have here then is a completely different story: Twitter’s mobile CTR may in fact be one to three times higher than Facebook’s mobile CTR.

Why the flip flop? Apparently, TBG Digital wasn’t looking at comparable ad units. The company’s original report looked at Twitter Promoted Accounts — an advertising product that Twitter offers to brands looking to specifically promote their Twitter accounts –and found the mobile CTR to be just 0.266 percent. The problem is that Promoted Account mobile ad units aren’t comparable to Facebook mobile ad units.

“We took a deeper look at the data and, unfortunately, the engagement rates were not comparing like for like,” TBG said in a statement. “Twitter engagement rate measured click-through rate on Promoted Accounts, whereas the Facebook CTR was for newsfeed ads. A more comparable product for Twitter would have been Promoted Tweets, which typically see 1-3% engagement rates on desktop and even higher on mobile.”

In June, Twitter CEO Dick Costolo said that Twitter’s ad platform is perfectly suited for mobile and that the company often generates more revenue from mobile usage than desktop usage.

h/t Chris Sacca

Photo credit: BasBoerman/Flickr

Twitter has taken the most obvious next step in its quest to become an attractive destination for advertisers: It’s just released targeted tweets, the latest enhancement to its Promoted Tweets ad product that lets brands pay to place tweets in front of select audiences.

Promoted Tweets is the Twitter ad product that gives advertisers a for-charge way to gain additional exposure for their tweets in Twitter search or as part of the stream.

Targeted tweets, available today to all advertisers that use the Promoted Tweets product, gives companies a way to push these promotional messages out just to the Twitter users they want to reach in specific geographic regions or on a particular device. Promoted Tweets can be targeted at the country level or at the regional level in the U.S., according to Twitter’s website.

“Now global brands that have different launch dates for several countries can send tailored messages at different times, customized for the users in each country,” product manager Kevin Well said in a blog post. “Mobile app providers who only want to reach customers on one device can do so without also sending the message to desktop users.”

The geographic and mobile targeting options were already available to advertisers, though previously they had to first publish the tweet to all of their followers.

The enhanced targeting options, which have been tested by partners British Airways and Coca Cola in recent weeks, come just as new research has surfaced to suggest that Twitter’s mobile click-through rate of 0.226 percent is one-fourth that of Facebook’s mobile click-through rate of 1.1 percent. Twitter may be able to up its CTR with these additional targeting options, which should help advertisers reach audiences more likely to engage with their tweets.

Update: TBG Global, the company behind the research cited in this story, revised its findings. The company now says Twitter Promoted Tweets see 1 percent to 3 percent engagement rates on desktop, and even higher rates on mobile.

Photo credit: id-iom/Flickr

Twitter brought in an estimated $139.5 million in ad revenue in 2011, and it’s found a business model that’s made for mobile; now it’s greatest obstacle in ramping up revenue is the limited availability of its Promoted Products, which are currently available in the U.S., UK, Japan, and Canada.

Expect that to change — and soon. In the second half of 2012, the information network will expand the number of countries where Promoted Products are available to nearly 50, Twitter’s president of global revenue Adam Bain said today at a press conference at the Cannes Lions International Festival of Creativity.

Specifically, Twitter has its eye on Europe. The information network will next make its Promoted Products, the suite of tools that offer advertisers additional exposure to Twitter users on web and mobile, available in Spain, Italy, Germany, France, and the Netherlands, a Twitter spokesperson confirmed to VentureBeat. Latin American and Caribbean countries are also on the immediate roadmap.

The massive international expansion has giant implications for Twitter’s business. Today, 90 percent of Twitter’s revenue comes from the U.S., with other countries contributing just $26 million to its ad revenue this year, according to estimates from eMarketer. In 2012, the company’s ad revenue is expected to grow 86.3 percent to $259.9 million.

Photo credit: @TroyHolden/Twitter

If your company’s target audience is average, middle-aged men who don’t like change (e.g. Hank from King of the Hill), then Twitter just did you a huge favor.

The microblogging social network announced today it is extending the ability of advertisers to target BlackBerry devices with mobile ad spots and Promoted Tweets.

The Promoted Tweets on BlackBerry devices are advertisements that double as Tweets and that are displayed near the top of a user’s timeline. Much like the experience on Twitter’s main website, the Promoted Tweets only appear once and can be dismissed.

Twitter first started rolling out the ad targeting functionality to advertisers back in February. In addition to BlackBerry, advertisers can also choose to target iOS devices, Android devices, desktops/laptops, and mobile-optimized web apps.

“Promoted Tweets on BlackBerry and the ability to target campaigns to specific devices and platforms will help brands more easily connect to Twitter users —anywhere, anytime,” Twitter said in a statement on the company blog.

Research In Motion (RIM), which produces BlackBerry devices, is currently experiencing a downward spiral due to increased competition from iPhones and Android phones. Because of this, we had assumed Twitter was intentionally leaving BlackBerry devices out of its ad targeting platform when it launched. However, this is clearly not the case.

While BlackBerry devices might not have the growth they once did, advertisers undoubtedly see BlackBerry owners as a valuable demographic composed of enterprise users, government employees, and many international consumers.

Image courtesy of Fox Network

The Motor City is welcoming an import to town.

Popular social network Twitter has taken up residence in downtown Detroit to push its Promoted Products ad suite to the nation’s recovering automotive companies.

Twitter’s new Detroit office, located in the coworking and startup space known as M@dison Building, will house just a handful of ad sales employees who will work closely with the area’s marketers and ad agencies. The office will be led by Greg Myrick, an advertising executive who landed at Twitter after a five-year ride in ad sales at Yahoo.

“Detroit’s emerging mix of automotive and digital cultures made it a natural location for Twitter’s newest office,” Twitter president of global revenue Adam Bain said in a statement. “We’re excited to work face-to-face with the city’s most established brands and happy to play a role in downtown Detroit’s digital renaissance.”

The new base is just one of many satellite offices Twitter has opened in the past year as it seeks to more aggressively make big name brands and advertisers aware of the potential of its social ad space. The company, which already counts Detroit’s General Motors as a Promoted Products client, has also recently opened smaller regional offices in Washington D.C., Cincinnati, Austin, and Atlanta.

Photo credit: ifmuth/Flickr

Small is the new big thing on Twitter, as the company is, at long last, providing small businesses with a way to advertise on the social network.

Twitter is rolling out its self-serve advertising product to a select group of small businesses, the company announced Monday. American Express, Twitter’s launch partner for the program, is handling the notification process and both companies will invite more small businesses into the fold in the weeks ahead.

The self-serve platform democratizes two of Twitter’s ad products — Promoted Tweets and Promoted Accounts — and makes them accessible to businesses of all sizes, regardless of their budgets.

The two ad products allow for geographic targeting of tweets and accounts, and are offered on a pay-per-engagement basis. With Promoted Accounts, a business pays when a Twitterer follows their account. With Promoted Tweets, an advertiser pays for each click, retweet, reply, or favorite. Advertisers can set daily spend limitations and specify how much they’re willing to pay for each engagement.

The self-serve ad platform is Twitter’s first real attempt at becoming a contender in the online advertising war. In finally creating a hands-off system, Twitter has the opportunity to beef up revenue without additional overhead and, in theory, can now challenge Facebook and Google for online ad dollars. Realistically, the self-serve ad platform, when launched in full, will chip away at Yelp’s advertiser pool before it makes an assault on Facebook or Google.

But we’re getting a tad ahead of ourselves. The platform remains exclusive to American Express cardmembers and merchants until Twitter opens the offering more broadly later this year, a company spokesperson told VentureBeat.

Twitter has 140 million active users who send 340 million tweets per day. The information network is anticipated to bring in $259.9 million in revenue in 2012, according to eMarketer.

Photo credit: wildxplorer/Flickr

Twitter continues to charge ahead on the advertising front with more significant, mobile-focused updates to its Promoted Tweets product.

Tuesday, the microblogging network gave advertisers the ability to target tweets specifically to iOS and Android users. It has also added an option to let advertisers target mobile users by interest, so that Promoted Tweets can appear in the mobile timelines of users sharing similar interests with those already following the advertiser.

The changes come just a few weeks after Twitter started to pump up on the volume on the amount of mobile advertising content it displays to Twitterers on iOS and Android.

The Promoted Tweets experience for the mobile Twitterer will be exactly the same as the experience on Twitter.com, the company said.

“Promoted Tweets will appear in user timelines like any other tweet, and, like regular tweets, they will appear in the timeline just once; as people scroll, Promoted Tweets will flow with the rest of the tweets in the timeline. We will only display Promoted Tweets in the timeline when they are relevant,” a spokesperson said.

The new mobile targeting capabilities should prove enticing for advertisers looking to reach specific audiences, and could help the growing company draw much-needed advertising dollars away from Facebook, which already offers marketers highly specific targeting options.

Photo credit: info_grrl/Flickr

The Twitter mobile experience is getting infinitely noisier today. The information network is in the process of pumping up the volume on the amount of mobile advertising content it shows to users.

Twitter is adding Promoted Tweets, ads that double as tweets, to the mobile timeline inside Twitter’s iPhone and Android apps. Promoted Accounts, or the Twitter accounts that brands commission for additional exposure, are already being featured in both of the apps’ “Who to Follow” recommendation list.

And there’s a fun bonus that Twitter thinks you’ll go nuts for. “Initially, a small number of users may see Promoted Tweets near the top of their timelines from brands they already follow,” the company said Tuesday in an announcement. “This will help ensure that people see important Tweets from the brands they care about.”

Altogether, the mobile app experience, Twitter said, is now on par with what users already find on the web.

“Promoted Tweets will appear in your timeline like any other Tweet, and like regular Tweets, they will appear in your timeline just once; as you scroll, the Promoted Tweet will flow with the rest of the Tweets in your timeline,” the company explained.

Unsightly though the new ads may be for some users, the addition makes (dollars and) sense. A small majority, or 55 percent, of Twitter’s monthly active users access the information network via mobile device, meaning mobile is where the most money is to be made.

In fact, the proactive move makes mobile less of a risk for Twitter than it is has become for Facebook — unless you consider the potential to annoy people a risk.

Photo credit: info grrl/Flickr

Twitter’s Promoted Products — including Promoted Tweets, Accounts and Trends — are seeing 3 to 5 percent engagement, Dorsey said. “Advertisers are coming back … [the market] is proving that this is something people want to see more of.”

The company’s Promoted Products offer advertisers a way to purchase their to the top of search results and, more recently, to buy their way inside the Twitter streams of members who may or may not be following them. The company’s fledgling advertising suite of products has been moderately successful from a purely financial perspective — the company was projected to earn $140 million in revenue for 2011.

During the DLD interview, journalists Holger Schmidt and David Kirkpatrick also peppered the Twitter founder and Square CEO about the information network’s place in the social ecosystem. Schmidt asked about Twitter’s place in relation to Google and Facebook, and Kirkpatrick queried the even-keeled entrepreneur as to whether Google+ constituted a threat to Twitter.

Twitter, said Dorsey, is distinct because it hosts a public conversation in a public medium. Its future is not threatened by the existence of Google’s social network, he added. Dorsey also spelled out that Twitter’s primary objective is to become something so simple that the whole world can use it to consume information and find breaking news. Consumption and news discovery, not the act of tweeting, he said, is becoming an increasingly popular way for people, especially non-Twitter members, to discover information.

Dorsey avoided saying anything inflammatory about Twitter’s social competitors, opting instead to focus on the company’s strengths as a service. Dorsey was, however, vocal about Twitter’s business model and its continued role as a medium for information exchange. When asked about whether Twitter is contributing to a new age of democracy (in light of recent developments around SOPA), Dorsey said that free access to information helps the world and humanizes mass events.

Disclosure: The Digital Life Design conference paid my way to Munich. VentureBeat’s coverage of DLD 12 remains objective and independent.

[Image via Hubert Burda Media/Flickr]

These figures come from eMarketer, a digital intelligence firm that keeps a close eye on ad revenues for companies like Twitter and Facebook.

Last year was Twitter’s first full year of selling advertising products. In 2011, however, Promoted Tweets, Promoted Trends and Promoted Accounts (as the company calls its various ad products) really started ramping up. Earlier this month, the company started serving promotional content in a new way altogether, allowing advertisers to push tweets to users even if those users don’t follow the advertiser’s account.

Another new source of revenue for the end of 2011 and the duration of 2012 will be political advertising. The company opened a Washington, DC-based ad sales office to gear up for a slew of political advertising over the next 13 months or so.

While Twitter has played an important and growing role in politics since its use by the 2008 Obama presidential campaign, this marks the first time the platform will be used for traditional, disclosure-tagged political ads.

eMarketer estimates that by 2013, Twitter’s ad revenue shall have grown to around $400 million annually. Not bad for a startup that famously didn’t have a business model just two years ago.

This month, the company also announced that ad targeting options would be coming up soon. These would allow marketers and brands to target consumers by location and other criteria.

Already, Twitter’s unique approach to ads is creating stellar engagement rates for brands. The company doesn’t even call its promoted content advertising, in fact, because it insists that even brand-related messages are and should be indistinguishable from “normal” tweets and trends on Twitter.

“Marketers have seen solid engagement rates with Twitter advertising — in some cases better than those on Facebook — despite Twitter’s relatively smaller audience,” said eMarketer principal analyst Debra Aho Williamson.

Twitter CEO Dick Costolo confirmed this at a meeting three weeks ago, saying, “We continue to see great engagement rates … The health of the business is great.”

Costolo noted that one major advertiser, Virgin, had its fifth largest sales day ever due to a Twitter campaign. Most advertisers see an engagement rate of between 3 and 5 percent, and 80 percent of advertisers run more than one campaign.

Twitter’s rising valuation

As the company’s business model has emerged and begun to show early signs of success, its valuation has grown.

In April 2008, the company was worth less than $150 million and actually closer to $80 million, according to sources familiar with the company’s then-latest round of funding.

But by the following year, the company’s valuation had already skyrocketed to $1 billion. Another round late in 2010 put Twitter’s worth at $3.7 billion, with another February 2011 investment pegging it at more than $4 billion.

While speculation was running rampant that some investors valued the company at around $10 billion toward the end of 2010, a confirmed funding round last month left Twitter valued at $8.4 billion.

While $8.4 billion seems like a significant jump from $4 billion a few months before, VC firms aren’t the only ones who’ve pegged Twitter’s valuation in that neighborhood. Recent private stock trading on sites such as SharesPost has seen prices ranging between $34.50 and $31, which values the company at $6.8 billion to $7.7 billion on the private market.

Soon, the service will start rolling out Promoted Tweets to all users accounts, whether or not the user follows the brand in question.

“We’re expanding Promoted Tweets,” Costolo said. “You’ll start seeing them from companies you don’t follow. We’ve been super cautious about that, we didn’t want to sacrifice user experience.”

Recently, Twitter announced it would be pushing Promoted Tweet ads to the top of the stream, making commercial content more prominent and likely more profitable.

Here’s how the new ads will work: I don’t follow Best Buy. Ordinarily, I wouldn’t be seeing any tweets from Best Buy. But if Best Buy pays for a certain kind of advertising on Twitter, I’ll be seeing tweets from Best Buy when I log in.

“Right now, when you log in, you’ll see accounts to follow or similar content in the right column,” said Costolo. “Promoted Tweets will work the same way. It will be based on the interest graph of the accounts you follow. So you should be seeing the kind of content you’re already interested in.”

In addition to showing Promoted Tweets to users who don’t follow a particular brand’s Twitter account, Costolo noted that the company is also working on sharing ad revenue with third-party developers that serve Promoted Tweets in their Twitter apps.

The company is also working on more refined ad targeting, and Costolo says Twitter already sees robust engagement around advertising content on the service. He noted that Virgin had its fifth largest sales day ever due to a Twitter campaign.

“We continue to see great engagement rates… The health of the business is great.”

Now if advertising is usually about getting new customers, why would brands pay to market to their existing customers?

Many years ago, Google had a stroke of genius: to put ads above the search results and then charge brands to own the top spot where the brand inevitably would have been the first result. So when people search for BMW, BMW does not want Mercedes getting the top spot, so it buys placement. Nowadays, it is part of most every brand’s AdWords buy to purchase their own name. MarkMonitor, the digital brand protection company, reported last week that in sectors like finance and travel, nearly half of the ad buys are on the competition’s keywords. Although Google technically does not allow the purchase of trademarked keywords, the practice has become so widespread that some brands such as American Airlines have sued Google.

Facebook then jumped into the fray with its brand pages. First, a brand has to get “Fans” by getting people to “Like” its page. This is accomplished by special ad units on Facebook called Page Ads. Other options include “Like-blocking” an app on a page so that a consumer has to Like the Facebook page in order to get access to exclusive content, sweepstakes or deals. Once a consumer has Liked a Facebook page, the brand can then purchase additional Facebook ads such as Sponsored Stories targeting users that have liked its page, as well as the friends of the user that have liked its page. In effect, the brand is paying to advertise to users that have already said they liked it.

Twitter is following the Facebook model. First it charges brands to be a Promoted Account, which puts a brand in the “Who to follow” box on the Twitter homepage. Then, a brand has to buy Promoted Tweets, so that its message doesn’t get lost in the endless stream of tweets. Again, paying to advertise to users that have already said they liked its brand.

Over the past four years I have run numerous social marketing campaigns for big brands as the general manager of the social marketing platform Webtrends Social. We see a 7x increase in clickthrough rates when brands target their own fans on Facebook. Comscore recently released a report showing a 10% friend drag along for brands such as Starbucks, Southwest and Bing. I imagine Twitter will soon add the ability for brands to advertise to people following its followers, just like Facebook lets you advertise to friends of fans.

As I wrote a couple of months ago, sending advertising to your existing users is akin to email marketing. A Promoted Account is the same as an email opt-in, and a Promoted Tweet is the same as sending your customers an email. Just a lot more expensive.

Very few companies have achieved the scale to charge brands to reach their own customers, and Twitter is now one of them.

Peter Yared is the VP/GM of Social at Webtrends. He has founded four e-commerce and marketing infrastructure companies that were acquired by Sun, VMware, TigerLogic and Webtrends. You can follow him at @peteryared.

Twitter has struggled to make profits since its start in 2006, so adding in new ways to advertise to the service’s 200+ million users is a no-brainer. Adding promoted tweets in a user’s timeline will help guarantee more eyeballs to marketers and help Twitter sell advertising at a higher rate.

The biggest issue with promoted tweets and other new ways of advertising is the potential to alienate Twitter’s active user base. Earlier this year, Twitter introduced a feature called QuickBar to its iPhone app that placed trending topics and ads permanently at the top of the timeline. Users were so distraught with the change that Twitter removed it. Instead of going the QuickBar route, the promoted tweets coming in August will flow down the timeline just like other tweets.

Twitter has been testing the new promoted tweets inside the Hootsuite third-party client, but this new product will work on Twitter.com and eventually move out to other official Twitter clients as well.

A report yesterday indicated that Twitter is in the process of raising $400 million, which would value the company at $8 billion. One way to help attract those investors will be to show them the company can make real profits.

As a frequent Twitter user, I’m fully supportive of the move to add occasional ads to my timeline if it will help Twitter stay in business. Hopefully, Twitter will keep the ads targeted accurately to my declared interests and sneak ads my way in a non-annoying fashion.

The company introduced “Promoted Tweets” last year, modeling it on Google’s search ads. Right now, they only appear in Twitter’s search engine results. Advertisers pay Twitter to promote their own tweet messages based on relevant search terms.

Unlike regular tweets, seeing Promoted Tweets in the main update stream won’t depend on when the short message is sent. If a user is following a particular brand, its tweets could appear sooner in the timeline of updates, according to sources in the report. For example, an hour-old promoted tweet will show up next to the most recent tweets in the main stream.

Previous attempts at changing the way information appeared in the main stream on Twitter’s iPhone app met with a backlash from users. The app featured a bar at the top of the screen, called the QuickBar, that showed trending topics. Twitter later removed the QuickBar after  deeming it too intrusive to the user experience.

The new changes associated with Promoted Tweets entering the main update stream seem far less intrusive than the QuickBar. But it could still create backlash from users who have gotten used to an ad-free experience.

The new emphasis on Promoted Tweets is part of Twitter’s effort to create more ways of generating revenue from the service, which has more than 300 million registered users.

AllThingsDigital’s Kara Swisher reports that Twitter just raised a $200 million round that valued the company at $3.7 billion.

In a company blog post, CEO Dick Costolo confirmed that the company has raised a new round from Kleiner Perkins Caufield & Byers and existing investors. (Kleiner partner John Doerr recently said that his firm was wrong to turn Twitter down in its early days). And Twitter has two new board members — Mike McCue, former CEO of Microsoft-acquired TellMe and currently CEO of Flipboard, and David Rosenblatt, former CEO of Google-acquired DoubleClick. (The post doesn’t mention funding amount or valuation.)

Earlier speculation has placed Twitter’s new valuation at $3 billion, which led VentureBeat’s executive editor Owen Thomas to ask (since it’s all speculative math), “Why not $10 billion?“

Costolo titled his post “Meaningful Growth”, and he starts off with a list of numbers showing Twitter’s growth for 2010: 25 billion tweets, 100 million new registered accounts, and growth from 130 to more than 350 employees.

What’s missing is any mention of revenue. It has only been a few months since Costolo declared that Twitter has “cracked the code” on advertising, and co-founder Ev Williams said more recently that the company is still exploring business models.

Earlier today, the company declared, “It’s Business Time” and unveiled an upgraded website at business.twitter.com, including pages highlighting its advertising products (Promoted Tweets, Promoted Trends, and Promoted Accounts). But even then, each product is described as “in beta with a small selection of advertisers.” If you want, you can fill out a form — not to place ads, but so Twitter can notify you when the company is finally ready to accept your money.

In a blog post announcing the move, the company said it has reached the third-ish step of a multi-part process. First, it introduced Promoted Tweets into the search results on Twitter.com. Then it made those ads visible to searches in applications like HootSuite. And today, it’s introducing ads directly into the stream on HootSuite. That’s where they’ll probably get the most attention, making them more valuable and potentially more intrusive than the ads in Twitter search.

Once Twitter has seen how users react on HootSuite (and later, perhaps, other apps), it will start introducing ads on the main Twitter site. For now, the company says its ad program is still very much in the testing phase:

During this testing period with HootSuite, we will experiment with where and when Promoted Tweets are shown in the timeline. Not all HootSuite users will see Promoted Tweets and those who do may see different Promoted Tweets in different places in their timeline. As with Promoted Tweets in search, we will display Promoted Tweets in the timeline when they are relevant. Similar to our Promoted Account recommendations, we use several signals to determine a Promoted Tweet’s relevance to a user, including the public list of whom they follow. We will expand the rollout only when we feel we’re delivering a high-quality user experience.

So does that mean we’ll soon see obnoxious promotional messages popping up all over Twitter? (That’s assuming you don’t think Twitter is covered with obnoxious promotional messages already.) Not necessarily. Back in September, the company’s chief operating officer (and now CEO), Dick Costolo, explained some of the thinking behind the ad program. Promoted Tweets start out as regular tweets, and even though companies pay Twitter to promote them, the ads will only be shown if they’re interesting or useful enough to garner a certain level of user engagement.

Costolo said:

In all of our advertising products, what we’re trying to do is not say, “Here’s the content, here’s the ads.” What we’re trying to say [is], “This is organic content that people like. How can we take this thing that’s organic and enhance a company’s ability to communicate with their customers?”

Prior to Twitter’s announcement, AdAge published a story reporting that the company was about to launch in-stream ads, starting with HootSUite.

The dramatic rise — with growth of 20 percent this year, accelerating to 24 percent next year — shows why Google, the biggest player in online advertising, is finally taking the threat from social networks seriously, and Facebook is moving to protect its turf.

The gradual economic recovery and the growing relevancy of social media in marketers’ mindshares is credited for the increase in spending. eMarketer previously forecast  the market at $1.3 billion back in December. The research firm says it has increased its predictions as a result of “strong performance from online ad spending in general, and Facebook in particular.”

Unsurprisingly, Facebook accounts for more than half of social-network ad spending. In an interview with Inside Facebook in June, Mark Zuckerberg confirmed that estimates of around $1 billion to $1.1 billion for its 2010 revenue were “not so far off.”

Despite its buzz in the marketing world, Twitter’s contribution to the number will be low in 2010. The microblogging service could see a noticeable leap in 2011 with implementation of its Promoted Suite of advertising products and its “resonance” model of measuring the effectiveness of ads. Back in April, the site announced Promoted Tweets, which enables brands to buy special placement atop search results.

The bullish forecast of ad spending in social networks should come as no surprise to anyone who has been following the space. Marketers may be slow to grasp new opportunities, but they do eventually follow audiences to new media. Recently, Nielsen reported that social networking dominates Americans’ time online with nearly 22 percent of all online activity, a 43 percent increase from 2009. This figure neatly correlates with Facebook’s estimated revenue growth over the same time period.

Last week, eMarketer estimated advertisers will spend $220 million on advertising in social games, a rise from $183 million in 2009. Although advertising income provide a healthy contribution, it’s worth noting that it is revenue from virtual goods that account for the majority of income in social gaming, which alone is reported to be a $1.6 billion market.