Twitter has been making a lot of moves lately, and where they’re going with them is anyone’s guess. But if I were to venture an opinion, I’d say it’s likely that they’re looking to monetize their users more heavily than the current Promoted Trends, Tweets and Accounts offers, and it’s possible that one way they’ll do this is by introducing banner ads on Twitter.com and related services.
When Twitter launched its Promoted Products in April 2010, they made a big deal about being “non-traditional”. This meant they weren’t (for the time being) going to slap up banner ads or have popups or that annoying little folded flap at the top right-hand side of a website that rolls down when you hover over it. No, Twitter would go against the norm and create their own advertising model.
And while it appears to be working (as Promoted Trends apparently sell out nearly every day), it’s not bringing in enough revenue to justify the 7.7 billion valuation on the secondary stock market.
There are a number of signs that point to Twitter expanding beyond Promoted Tweets, Trends and Accounts in the near future, especially when you look at some of the company’s more recent moves. Here’s where I think we might see display ads on Twitter in the future:
Ads on photos
It’s widely expected that Twitter will introduce its own photo sharing service sometime today, and this will have wider implications than just edging out third-party developers like Twitpic and Yfrog.
Go check out a Twitpic photo, and pay particular attention to the right sidebar. Sure, it includes some related photos for you to browse, the ability to share the photo and some stats, but the prime real estate is owned by two square display ads.
If Twitter does indeed announce its own photo sharing service, it only makes sense that they’d do something similar. If they put up a few ads on each photo’s page, they’d likely bring in some serious revenue that could compete with their Promoted Products.
Ads on Twitter.com
Twitter is quite proud of the fact that they don’t have traditional display ads on Twitter.com… or at least, they used to not have traditional ads on Twitter.com. As recently as last month, Twitter began experimenting with text-based ads on Twitter.com, promoting ABC’s coverage of the royal wedding and the NFL draft coverage. Now, they’ve advertised their own products in this spot for some time, like Twitter for iPhone and Blackberry, but April was the first time anyone noticed a third party’s ad in that space.
However, this doesn’t appear to be a regular occurrence, as about three dozen homepage refreshes revealed only Twitter’s own ads beneath the Trending Topics module. But that doesn’t mean they’re giving up.
When Twitter launched the New Twitter, complete with the right-hand details panel that we are all used to by now, some speculated that they would begin rolling out ads. And it could still happen: they’ve changed the layout and configuration of the details panel subtly since its launch, that may suggest they’re gearing up for display ads in the future.
For instance, Twitter removed favorites and lists from the details panel just this week. This freed up some space that I think they might use for display ads sometime soon.
And finally, Twitter has an opportunity to monetize one of their most recent purchases, TweetDeck, using display ads. Whether it would be a smart strategy or not, they have the option of creating a two-tiered product, with one free, ad-supported version for light TweetDeck users, and another premium, ad-free version that requires a subscription. This way, they make money on the ads on the free version as well as subscription payments.
As I hinted above, none of these strategies might be the smart thing to do, but Twitter has to start making some serious money, and soon. They’re valued at about 50 times their revenue. And while there are no rumors of an IPO coming up, closing this gap is something they are clearly interested in doing.
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