Twitter Execs Address The Big Question: Monetization

For its next talk at Chirp, Twitter execs Ev Williams and Dick Costolo to discuss something that hasn’t really been associated with Twitter before: Monetization. I’ll be live blogging my notes on his his talk below.

• You can make money in the short term if you have a lot of traffic, we’ve had many opportunities. We haven’t done that because we can make a lot more money than these short term solutions provide.
• Monteization is a product and technology feature. Until recently, features for users were more important. Now we’ve made progress in our infrastructure, so we’re taking on this next feature set. The first leg is Promoted Tweets
• Dick Costolo has taken the stage
• Promoted tweets. We thought of a while ago. It had to be organic. It had to be ‘of twitter’. It had to be something that wouldn’t just work on Twitter.com, but everywhere Tweets went. That kind of made it easy for us, because it sort of insisted that monetization platform be based on tweets.
• In November, I pre-announced this. I said it was going to be Fascinating, non-traditional, awesome!”.
• Promoted Tweets is not ads. It’s only tweets.
• A brand can select its own tweets only, they can’t select tweets from other unrelated accounts.
• It combines in one platform: earned media and paid media
• Promoted tweets allow companies to engage in real time… Recent a study showed that the more tweets there were about a movie, the better it would do. So if you’re a movie studio, that’s pretty important. If you’re a movie studio, to be able to engage in the conversation, this is great for those people. People will be able to see what the studio is saying
• Ev’s example: iPad comes out. Lots of tweets about charging the iPad, and people having problems about. Occasionally there would be a tweet from a company selling iPads, saying if you’re having problems, click here. If you didn’t search in that ten seconds for the iPad battery, that tweet fell off the bottom of the stream.
• Analytics: we will have real time analytics for companies writing promoting tweets.
• The first phase of this roll out, only search and Twitter.com. We want to take a thoughtful approach to how this works. We have hypotheses about how we think this will work. Testbed of impressions and inventory. After we feel like we have a sense of if this works, we’ll roll it out. Make it available to all ecosystem partners, anyone who wants to use it. You don’t have to use it
• You won’t pick where your promoted tweets go — they go everywhere the tweets go. We’re all equal citizens. We will expand delivery of promoted tweets beyond search. Why? Because we think the ability to target what we call the ‘real time interest graph’ is compelling and can also enhance the user experience. We won’t do it til we can make them enhance experience
• Resonance: measures ‘multiple axes of engagement’. Didn’t want to force companies to engage in one axis (e.g. a click or follower). There are different ways companies engage with customers. So didn’t want to be cost per follower. Resonance measures all the ways people engage with tweets. Replies, retweets, favs, hashtags, clicks on hashtasg, clicks of avatar, shortened links, impressions after retweet.
• Companies will have an expected resonance score based on past stats. A company can select multiple tweets to promote. If we see one or two start to resonate more than others, the one that doesn’t will fall out of rotation. Tweets that don’t resonate will disappear as promoted tweets. We will stop showing promotions that people don’t like. Those tweets are organic too, so they’ll still appear when people are following that account.
• Looking at what people follow, you can paint a model of interests. For companies/individuals using Promoted Tweets there’s a possibility of targeting “interest graph” in real time.
• How will price these? Initially at CPM. Will move to ROI based on Resonance once we understand it better. We just launched it so don’t know what resonance means yet. I expect that will happen in months, not tweets.
• It’s not just about Twitter.com making money. We’re interested in model that scales with ecosystem. Entire ecosystem making money. Once we syndicate this, it will be available to everyone in the ecosystem. Very transparent, 50/50 rev share. It will be the same for everybody. You don’t have to take promoted tweets. We will enforce at some point soon: TOS that say what we will and won’t be Okay with in the stream. Something we would dislike: here’s an ad a third party client has injected an ad in a tweet stream but clicking ‘retweet’ on it will not retweet it, it will take to some landing page. We will forbid that.

Starbucks/ John Battelle have taken the stage for a Q&A:
Q: Have you started thinking at Starbucks about which tweets will be promoted? Do you have a team fighting to have their tweet promoted?
Starbucks:We don’t want it to be an ad, we want to break through the noise. (Battelle: but it’s an ad).
Q: When you say it isn’t an ad, what do you mean?
Costello: We want stuff that is organic… Starbucks had a tweet retweeted thousands of time.
Q: The notion fo promoted tweet disappearing after some time is compelling. I’m guessing most marketers, when they pay for something, they expect it to be seen.
Costello: You don’t pay for tweets that don’t get seen.
Q: Similar to AdWords. You don’t pay until a click occurs, that’s a quality signal. Google is secretive of the algorithm. Is Twitter going to be more open?
Costello: We will provide resonance score to the company. What we don’t want to do, I’m not saying we will never do this. I’d like to try not to publish the formula, then people will just try to game it.
Q: From Starbucks’ point of view, what do you do to create resonance? What have you learned?
Starbucks: I think we try to listen to the community, see what they want. A lot of people have relationship not with Starbucks but with their barista/store. It’s about listening, finding a way to be relevant.

Q: Do you let anyone post?
Starbucks: Social media policy? We’re working on it.

Q: Real time interest graph. Can you say more on that?
Costolo: Twitter is this very visible public, one-to-many relationship, not just with people but CNN Breaking news, WSJ, other things. We’re not just a social media platform or microblogging, we’re the web’s interest graph. Can look and see, “this person is interested in this kind of thing”. That’s super interesting and compelling for companies to be able to target that interest graph. It’s our obligation to prevent them from doing it in a way that harms the user experience.

Q: With Promoted Tweets, your goal is for a brand to go to a dashboard.. see how tweets resonate..
Costolo: We’re being very cautious. We may see that the only thing that really works is Geo. If someone only wants a promotion to only show up to people near Lollapalloza, that seems obvious.. there are a bunch of ways, we don’t know what people will like/hate.

Q: Can third parties curate out promoted tweets?
Costolo: I don’t think they’ll have to. If you don’t want to participate in Promoted Tweets, so you don’t have to take them. I imagine that someone will build tools to filter out Promoted Tweets. That happens with AdSense right now. That’s life.

Q: You have 105 million users. How many engaged active users do you have?
Costolo: I don’t know. I don’t think we’ll be able to know because it depends on the way people use Twitter. People see tweets on other sites. There are ways we will try. We will have to.

Q: You do know how many active users, in terms of people who use their accounts to tweet.
Costolo: The absolute number of accounts that tweet, we do know. But it’s a consumption service.

Q: Can you give a timeline for rolling out monetization?
Costolo: No. But it won’t be as late as next year, or some of us won’t be working at Twitter any longer.

Q: Will anyone be able to use Promoted tweets?
Costolo: There is self serve. We may have a restriction as far as how long your account has been around, etc. We absolutely imagine a third party ecosystem will develop around this.

Q: If Starbucks needs to have a tweet resonate for it to appear as a Promoted Tweet, wouldn’t it already be shown in your search engine (which will eventually incorporate resonance) anyway?
Costolo: We just don’t know how resonance is going to work yet. Lots of factors to look at.

Costolo: You don’t get paid you retweet a promoted tweet. There are already so many kinds of sophisticated spam people try to create spam. We have ideas about what they will do with Promotion, we are already working on that. We don’t wan to add fuel to the fire by offering money to people retweeting. Other thing, if someone says something great about Starbucks, can Starbucks retweet and promote it? We’re not allowing that at first. Answer two re: it’s not 50% if it’s less tax/costs. That’s standard in the industry. There’s a net revenue number that comes in.

Q: Is this the long term rev model, or just a response to market demand for a model?
Costolo: I think we’ve been good at not responded to a market demand for a model. I think this will be one pillar of what will probably be a two pillar system. Second will probably be commercial accounts. We can thread those together. Single underlying analytics dashboard. Companies will have single dash for promoted tweets, multiauthored accounts, etc.

Q: Any forbidden tweets/links?
Costolo: We have a huge trust/safety team. Focused on malware, tweets that shouldn’t be in the environment.