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Twitter

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on 15 June 2010

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Transcript of Twitter

Twitter's new strategy: Making money, 140 characters at a time
Twitter's new strategy: Article Video Comments Susan Krashinsky

Globe and Mail Update

When Twitter co-founder Biz Stone sat in the hot seat on the phony news talk show The Colbert Report earlier this month, Stephen Colbert made fun of the company's apparent failure to make money from the social media site.

“So, I assume that ‘Biz' in ‘Biz Stone' does not stand for ‘business model,'“ the comedian-pundit quipped.

Mr. Colbert's zinger was a “home run,” Mr. Stone acknowledged in a Twitter blog post (http://blog.twitter.com/2010/04/hello-world.html) Tuesday. He then swung back, unveiling Twitter's long-awaited plan to advertise on the site, finally taking real steps toward monetizing its popular success.

The plan is for “Promoted Tweets” for which companies will pay, allowing their messages to be displayed more prominently to users.

“Over the years, we've resisted introducing a traditional Web advertising model because we wanted to optimize for value before profit,” Mr. Stone wrote. “… This announcement is a long time in coming.”

Twitter first pitched the new idea to advertisers a couple of months ago, said Porter Gale, vice-president of marketing for Virgin America, which has been in talks with the firm for the past six to eight weeks.

Virgin is among a group of companies that will test out the Promoted Tweets during their “first phase.”

The financial terms of Twitter's new advertising deals were not released. Ms. Gale told Associated Press that while the promoted messages were in the testing phase, Virgin America would not be paying for them – and that a paid model would likely emerge in the future.

Ms. Gale declined to comment further on the financial details.

This week, Virgin America will be using its Twitter ads to announce a new city where the airline will fly. “That [the announcement] is really our statement to show the power of social media and how much we think it can help drive our business forward,” Ms. Gale said.

This is not Twitter's first attempt to bring in revenue. At the end of last year, it penned deals with Google and Microsoft to have user updates appear on search engines.

But because Twitter is a private company, it was impossible to verify reports that the deals were enough to turn a profit.

“It brought in some money, but it was small change,” said Simon Parker, a professor of entrepreneurship at the Ivey School of Business, University of Western Ontario. “The real innovation has just happened, now.”

Prof. Parker recently wrote a case study on how Twitter would make money from the site(http://cases.ivey.uwo.ca/Cases/Pages/home.aspx?Mode=showproduct&prod=9B10M028). “Its strategy has been deliberate, to build up its user base until it reached critical mass,” he said, adding that it's a typical pattern for Internet start-ups of this type. With its audience of millions, Mr. Parker believes the new ad plan will work.

The new tweeted ads began to pop up in search results yesterday after the announcement.

By mid-afternoon, half of the advertisers that are participating in the test run had Promoted Tweets appear when a search was done for the company name, or for certain key terms that appeared in the Promoted Tweet (such as “coffee” for Starbucks).

Trial advertisers are already optimistic.

So far, Twitter has been “a huge opportunity to us as a marketing tool, using our fans as brand ambassadors,” said Ellen Stone, senior vice-president of marketing at NBC-owned cable channel Bravo. She said the time the company took to develop a non-invasive advertising plan was important to a marketing effort that has Bravo fans using the site to interact with on-air personalities and talk about their favourite shows. “It elevates our message.”

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The article states that twitter will now let ads on their website.
This will allow companies to advertise and twitter will earn money, becasue these companies will have to pay twitter for each ad. WHAT SFA
GlobeAndMail.com This event occured on a talk show in early april.
This is the first time since it began that twitter is starting to make revenue.
The reason for this is becasue the owners of twitter wanted to maximize the number of users on twitter and then launch adevertising because the more users there are on twitter the more money they'll make.

The co-founder was also asked why they delayed this so much. His reply was that they wanted to optimize the value before profit. Needs and Wants
Ads posted by companis are targeting the wants of people Decision Making Twitter decided to increase their users then launch the advertising Ethics values. Twitter valued the quality of their webiste. Over 105 million users # 1 Social
Bookmarking
Websites Virgin America
Best Buy
Sony
Starbucks
Everytime a user views an ad, Twitter gets paid.
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