Well, it finally happened. After months, maybe years, of speculation, Twitter pulled the trigger on its ad monetization concept. We can now refer to it by its actual name: Promoted Tweets.

Everything we know about the plan so far is consistent with November 2009 comments by Twitter COO Dick Costolo and a February 2010 blog posting by All Things Digital’s Peter Kafka. That is, Twitter will show sponsored posts in feeds resulting from selected user-initiated searches. For example, when some users search for Starbucks or Best Buy, they’ll see ads from those companies before they see the string of conversational tweets that meet the search criteria. The Wall Street Journal noted that 2% to 10% of Twitter users will be part of the initial rollout, with more to come later.

At the most basic level, Promoted Tweets emulates the Google model of tying relevant advertising to search results. But that doesn’t mean Twitter will necessarily be able to monetize search to the extent that Google has.

Consider the differences between the platforms.

Google users tend to search for archived information, which makes them amenable to advertising as a tradeoff for thorough search data. On the other hand, Twitter users more often search for timely information and, in general, and are less likely to tolerate having their experience stalled by an ad. That being said, if Twitter is able to integrate Promoted Tweets into search results and user timelines as seamlessly as Digg, for example, it’s possible that users won’t be too bothered.

Then there’s the third-party issue. Many Twitter users access the service via external Web and mobile apps, so measuring the effectiveness of the ads will be more challenging for Twitter than for a closed-loop system. And measurability will be critical to the success of Promoted Tweets because the system is based on a CPM model. Even more importantly, Twitter has said it would discontinue ads that don’t measure up to a pre-established set of criteria. Twitter calls this “resonance,” and the factors that go into it include the number of people who saw the post, the number of people who replied to it or passed it on to their followers, and the number of people who clicked on links, according to The New York Times.

So, will Promoted Tweets work? This will depend on how consumers react to having a corporate presence in their Twitter feeds, which in turn will depend on how well Twitter implements this new model. So far, the company is acting cautiously, limiting ads to search results among a small percentage of its users, with a fixed number of brands participating.

It seems smart to float a trial balloon rather than launch a rocket ship. This will allow Twitter to gauge feedback quickly and correct course if necessary—all of which is easier in a limited-scale project.

Consumers have grown accustomed to sponsored search results, so transferring that paradigm from Google/Digg to Twitter is not a huge leap. The real test will come later, when Twitter attempts to run ads in user timelines. Can the company do this while continuing to grow its user base to its stated goal of 1 billion by 2013?

Probably not, but more modest growth fueled in part by this ad platform seems like a reasonable expectation.

Image Credit: Twitter.com

Up until this week, The New York Times has been vague about its plans to erect an online pay wall starting in early 2010. Maybe they should have kept it that way.

All we knew was that The Times would follow the Financial Times model—i.e., a metered-access system where site visitors can to read a fixed number of articles for free before they hit the pay wall.

Now, The Times is starting to share more details of its plans, but instead of striking a clear, consistent chord, we’re hearing a cacophony of mixed messages.

Speaking at the PaidContent 2010 conference at the Times’ headquarters in New York, chairman and publisher Arthur Sulzberger, president and CEO Janet Robinson and senior VP of digital operations Martin Nisenholtz entertained questions from journalists. Reuters’ Felix Salmon asked whether Times branded blogs such as Freakonomics and Paul Krugman’s blog would be counted toward the quota, to which Mr. Nisenholtz responded that Times’ blogs would be behind the pay wall.

As Mr. Salmon pointed out in a blog posting of his own, this decision by The Times raises uncomfortable possibilities, including:

• Readers who participate in the Freakonomics comments section will be prompted to subscribe to the full New York Times online package in order to post.
• The Times will be allowing free access to site visitors who follow links from external blogs to NYTimes.com stories (as the company said it would do), while potentially not allowing the same access to visitors who arrive at a Times story via a Times blog.

When panel moderator Staci Kramer of PaidContent.org’s ContentNext Media pressed the panelists on the latter point, Mr. Nisenholtz alluded to a Google system that would cap the number of “first-link-free” stories that site visitors could read on NYTimes.com. Mr. Sulzberger added that The Times wasn’t interested in building “a system that just tries to please 5%-7% of the audience,” referring to “side-door” entrants who arrive at NYTimes.com from third-party sites.

This strategy seems destined to drive away readers. The blogosphere is the epitome of free media, and possibly the last thing that The Times should put behind its pay wall. Other sources of content—in-depth news analyses, crossword puzzles, archives, even video—seem like things that people would be willing to pay for. But blogs?

In the year they have to figure this out, let’s hope The Times leaders see the light. Otherwise, they might end up with TimesSelect déjà vu all over again.

Score another one for paid content. Just after The New York Times confirmed what we’d all suspected (is “feared” too strong a word?) — that it’s going to charge for online access again — YouTube became the second media giant in a week to announce a shift from free access to paid content. The user-generated video specialist is launching an experimental digital movie-rental service, and its first venture into transactionable content. But will it work?

(Read more…)