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Published: Wednesday, 4/14/2010

'Promoted tweets,' or ads, headed for Twitter

Dick Costolo, chief operating officer, said Twitter will wait to expand the ads until it knows "what worked and what didn't." Dick Costolo, chief operating officer, said Twitter will wait to expand the ads until it knows "what worked and what didn't."

Twitter Inc., the social-networking service whose users post about 50 million short messages a day, will begin running advertising to generate sales from marketers eager to reach its audience.

The blogging site, founded in 2006, will carry "promoted tweets" from advertisers including Best Buy Inc. and Starbucks Inc., the company said yesterday. At the outset, the ads will appear at the top of search pages.

The ads apparently won't bring in much money during the experimental phase of Twitter's commercial push. Virgin America, one of the advertisers that Twitter invited to test the concept, isn't paying for its first burst of messages, said Porter Gale, the airline's vice president of marketing.

The ads will be rolled out gradually, with fewer than 10 percent of Twitter's users likely to see them initially. The company says the ads should be appearing in all relevant searches within the next few days.

Social-media sites including Twitter have been reluctant to inundate pages with ads, highlighting the challenges of making money from millions of people who spend time interacting with others online.

Arrangements that landed Twitter content in Microsoft Corp. and Google Inc. search results are worth about $25 million, enough to make the company profitable in 2009, people familiar with the matter have said.

"This is the day when they start capitalizing on the audience they have collected, and as such will probably be no less important than the day that Google started taking advertising," said Carl Howe, an analyst with Yankee Group in Boston. "There's a great likelihood it will generate revenue; now the question is how much."

Twitter.com had 21.8 million U.S. users in January, up 9.1 percent from the previous month, according to ComScore Inc. in Reston, Va. San Francisco-based Twitter is the third-most- popular social-networking site in the United States after Facebook Inc. and News Corp.'s MySpace.

'The new advertising platform will first be on Twitter.com before it's made available to the many third-party applications that help users access Twitter data, Chief Operating Officer Dick Costolo said. He said the company didn't want to expand the ads until it understood "what worked and what didn't."

Twitter users post updates, or tweets, of as many as 140 characters to discuss anything from celebrity gossip to geopolitical events. The ads will be tweets that are labeled as "promoted," Twitter said.

More advertisers will be able to post tweets in the future, and ads will eventually be placed beyond the search pages. If users don't interact with the ad, it will disappear, Twitter said.

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