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Twitter introduces Promoted Tweets into user timelines

July 29, 2011 — 10:15am ET | By Jason Ankeny

Twitter is taking a major step towards monetizing its fast-growing microblogging platform by adding advertiser-sponsored tweets directly into user timelines, promising special offers, exclusive content and announcements from brands, business and charitable organizations that Twitter users already follow.

Promoted Tweets will appear in a user's timeline.

According to Twitter, Promoted Tweets will appear at or near the top of a user's timeline--like conventional tweets, the ads will appear in the timeline just once, and users may dismiss each promo with a single click. Twitter will launch the initiative in partnership with brands including HBO, Groupon, Starbucks, Gatorade and Microsoft (NASDAQ:MSFT) Xbox, as well as nonprofits like the American Red Cross and Make-a-Wish Foundation.

Estimates suggest that between 20 percent and 40 percent of Twitter users follow a brand or organization. Still, many analysts believe Twitter is playing with fire by introducing sponsored content directly into user feeds. Twitter disagrees.

"Promoted Tweets will be relevant to consumers. You already follow the brand," Twitter head of global revenue Adam Bain told TechCrunch. "Users want to be updated when brands have updates or exclusive content. The one problem we've heard from users is that when there is exclusive content or deals, there's a chance they might miss them. If the brand tweets at 9:00 a.m., and the person comes in at 9:15 a.m., they'll miss them."

Bain goes on to explain that Promoted Tweets in timelines follow the same cost-per-engagement model Twitter introduced last year. Brands who participate in the program are only charged if users engage with the ad, meaning Twitter generates revenue solely when a user clicks, retweets, or favorites the Promoted Tweet. Bain adds that clicks constitute the majority of user engagements.

Twitter's push to institute a revenue model corresponds with reports the startup is close to finalizing an $800 million round of funding comprising two stages: A $400 million investment in the fast-growing microblogging platform and another $400 million earmarked to cash out existing investors and employees. Citing sources close to the situation, All Things Digital reported last week that the two-stage round will fund Twitter business operations while enabling stakeholders like Benchmark Capital, Union Square Ventures and Spark Capital to monetize their privately held common stock. Investors including DST Global and J.P. Morgan are expected to participate in the latest round, which will value Twitter at $8 billion.

The Twitter platform now delivers 350 billion tweets a day. Twitter currently boasts more than 200 million registered user accounts and is on pace to generate ad revenues of $150 million in 2011, up from $45 million a year ago, according to research firm eMarketer. Mobile tweets make up over 40 percent of all Twitter posts, the firm said earlier this year, adding that 50 percent of all active Twitter users also are active on mobile.

For more:
- read this Twitter Blog entry