Business - Written by Jude Fiorillo 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.
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?
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