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Business - Written by on Wednesday, April 22, 2009 16:29 - 6 Comments

Twitter Advertising: Pay-Per-Tweet

In the last few years, a number of social media platforms have grown explosively, with Facebook and Twitter leading the way most recently. The question everyone has been asking is, how are these companies going to make money from their services? Social networking websites don’t appear to work particularly well for pay-per-click ads, and personally I think the reason for this is fairly intuitive, which is that people would rather spend time interacting with, and paying attention to, friends, rather than advertisements. Further, because the ads always seem irrelevant to me, despite the wealth of minable information that social networking sites have about their users and their interests, people become conditioned to mentally block out the ads – it becomes natural to ignore them and let them blend into miles and miles of online highway landscape.

Personally I think that Facebook and Twitter have a lot of potential as fee-based services for online entertainment, enterprise productivity, intelligence mining, information distribution, and others applications that would be build upon and expand from the free service offering, while leveraging an incredibly large audience. But for now, ads are the most direct route to a source of revenue…if people pay attention to them. A big IF. One company that is serving ads on these platforms, albeit in a different way, is Magpie, shown below. This pay-per-tweet service utilitizes a Twitter users’ account to broadcast a message to the users’ followers through tweets, and although the same click-through issues still apply, its interesting that this company is using a different approach to generate attention. And yet some questions remain…let’s dive in.

magpie_sketch_01

Magpie: Pay-Per-Tweet Advertising

Last summer I introduced Social Spark and its pay-per-blogging platform that matched bloggers with advertisement suppliers. Magpie is similar in that it allows advertisers to leverage someone’s social media audience (Twitter followers) and distribute ‘contextually appropriate’ ads through tweets, in exchange for compensation to the Twitter account holder of the pay-per-sale, pay-per-lead, pay-per-click or pay-per-view variety. The way it works is, a Twitter user signs up to Magpie and provides them with posting privileges to your personal account, specifying the type of compensation, as well as the volume of tweets the company can use for advertising in relation to normal tweets (e.g. 1/20). Advertisers use these accounts to distribute targeted messages based on the content of the twitter user and its respective audience, as if they come from the Twitterer. The amount of money that you make as a user depends on the type of plan you’re on, detailed below, which is taken directly from Magpie’s FAQ.

  • Pay-per-Sale: Here you get a cut of the sale price when one of your followers buys something on one of our customer’s sites through one of your tweets. This is perhaps the most lucrative of the compensation models.
  • Pay-per-Lead: Every time one of your followers enquires about a service or joins up for a subscription or the like, you get compensated (compensation rates tend to be 15% greater than Pay-per-View, depending on the campaign)
  • Pay-per-Click: You get paid every time one of your followers clicks on a link. Currently Magpie’s click rate is double that of any other online advertising.
  • Pay-per-View: You get paid a base amount for allowing a tweet to be placed in your stream – this amount depends on the number of your followers and the hotness of your tweets.

While there are upsides and downsides to this model, what’s interesting is that the ads are likely to get more exposure because they’re sandwiched right between authentic tweets, and it’s less easy to actively tune them.  Advertisers are able to reach a large volume of people through this tool, and insert a (theoretically) relevant message into a discussion that people are personally involved in. These are definite pluses for the tool. My breakdown of this platform becomes: a lot of people will see the ads but its success will depend almost entirely on its ability to convert views to click-throughs.

What about Magpie’s disadvantages? As with SocialSpark, there are ethical considerations at play here. Although Magpie allows and encourages people to create a disclaimer to affix to the end of the their Magpie tweets, for transparency, the whole pay-per-tweet activity is in that gray area where people may debate whether it is appropriate to lend your personal voice and relationships to companies for money in this way. Although one might argue that this is nothing other than brand sponsorship at a micro level and online, the flip side of the argument is that the diffusion of a branded message across trusted, personal relationships crosses a boundary. Regardless of one’s philisophical perspective on this debate, I see one possible consequence to a Twitterer who follows this path – where they lead, others may no longer follow – right or wrong, people may not appreciate having a ‘bot’ advertise to them, diluting their feed of real tweets, and may protest by no longer following that Twitter user.

The key factor in this then, becomes whether those tweeted ads have any value. Even though the ads are supposed to be targeted, I remain skeptical that any keyword based tool can understand a conversation to the degree that it’s able to insert textual advertisements that match the context. Twitter seems to be used as a tool to specifically reference events or activities, so a textual ad that has no direct relationship to that tweet is likely to stand out like a sore thumb. Text that is not targetted becomes spam, and the last thing you want to do is annoy your reader base, especially when there are so many other people competing for your attention.

Personally, if I were Magpie I would be interested in exploring how Twitter users could work together with Magpie in self-selecting advertisements from a range of possible topics, which could still be inserted on behalf of Magpie advertisers, yet would benefit from the Twitter account holder’s human touch and knowledge of its readership. I suspect that restructuring the ad placement mechanism in this way, to present you with a list of relevant ads that you can insert into your respective content, would increase relevance and click-through rates, while also decreasing resistance as a result of the bot-generated ad delivery system. Thoughts?

Lots of interesting elements on the table. Would you be bothered by ads like these showing up in your tweet feed? Why?



6 Comments

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Luke Grange
Apr 26, 2009 20:52

Massively interesting and current topic, Jude. I know just yesterday I tweeted about a sale I went to at a retail outlet (locality was important) where the outdoor wear was a real steal. I know my Tweeps (audience) really appreciated it. What if the retail store was a member of a brokerage which monitored the #store tags and then contacted me and thanked me on the stores behalf with a discount token.

Jude Fiorillo
Apr 27, 2009 12:01

I think that’s an interesting idea Luke – and I bet you’d be happy to receive a simple thank-you, let alone any financial compensation – a coupon/discount would be a nice bonus though! I think the key here is that the recipients of your tweet received some kind of value from your broadcast (a sale!) But it wasn’t just any sale, it was a real deal, and it took you as an individual to be able to communicate that, so the message didn’t become lost with the million-and-one other ‘deals’ out there. I think that if we could include that added human filtering/touch to online ads, as briefly mentioned in my original post, the level of ad relevancy would go up substantially, and the right message would (be more likely to) go to the right people.

betweeted
May 1, 2009 10:51

The only problem with be-a-magpie is it’s auto-tweeting… which, sure, you can turn it off, but the people who shamelessly spam Twitter won’t, so it’s just a technology that propagates spam. Check betweeted.com.

Mike
May 8, 2009 16:10

If you are interested – paypertweet (dot) com is for sale. Goto to the webpage and click the sedo link. You can make an offer there.

Arnold
May 15, 2009 6:26

Taking up Luke’s comment… if you only did one recommendation of that store then there’s really no issue whether or not you were paid in some way after the fact. However, what if that payment were to encourage you to do further tweets along the same lines either for that store or for others? I think then it would be a different matter and for transparency in that case you really should be tagging any such series of posts in some way as sponsored or whatever.

However, if you think about it we all constantly see advertisements for products that aren’t tagged as such every day. For example, when it’s an Apple computer used in a show that’s almost always because Apple have paid in some way for it to be there and that’s the case for most (all?) branded products that you see in popular shows or movies these days. I’m quite sure that Nokia paid quite a bit to have a mockup of a Nokia phone in the recent Star Trek movie for instance.

The problem with any preselection scheme that a twitter based campaign would have is simply that the payments to the twitterer are so small. Bear in mind that whereas a sponsored blog post can pay, say, $10, a sponsored tweet could be down to under 5 cents. Thus if you were to spend, say, a minute going to the site, reading the ad and approving it you’d be talking a payment of around $3 an hour and, of course, many tweet payouts are less than that which doesn’t stack up too well compared to a sponsored blog post payment of something like $20 to $30 an hour for an average blog.

Brandi Williams
Jul 22, 2009 22:52

I once believed in paying for tweets. I even told a friend to stop giving away free advertising in the form of Tweets and get paid for them. Then I thought about it not as a business owner, but as a Tweeter, friend, follower. I don’t believe in ghost tweeting and in essence that is exactly what this is. It is someone else tweeting as me…but I am getting paid. Just as Jude states, it is ethically wrong to do without telling anyone, but even if you provide full disclosure it is wrong. It compromises the relationship that you are trying to build. Social media at its very best is about engagement. In my opinion (expert and humble), it’s not about the quantity of tweets, how many followers you have or how many people you follow. Tweeting is about developing relationships, engaging with people in a new way. It’s about sharing information and helping build a community without boundaries. It has business utility because it allows businesses, organizations and individuals to be transparent and helps people develop relationships…the kind that can lead to sales, brand loyalty or a good friendship.

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