Monday, May 24, 2010

New Twitter Rules Clamp Down on Ad Networks

Earlier today Twitter has put its foot down and changed the rules that will substantially curtail third-party networks placing ads in the service. This decision will adversely affect many startups, such as Ad.ly and other third-party networks placing ads on the site. Twitter will not allow any third party to inject paid tweets into a timeline on any service that leverages the Twitter API.

This move is predicted to sharply curtail the activities of a number of Twitter ad startups, while giving more prominence to Twitter's own ads, called "Promoted Tweets." Promoted Tweets, which is Twitter's version of a search ad, appears at the top of a user's timeline based on "resonance", a metric that includes the number of clicks on an included link or the number of times the tweet has been passed around. In doing so, Twitter shares revenue with the applications that distribute the ads.

Now that the announcement has been officially declared, Twitter's Promoted Tweets will be the only sanctioned ad within the Twitter timeline. However, these rules will not ban Twitter users, themselves from taking ad dollars in exchange for their Twitter Posts. One example of this is Kim Kardashian who typically charges $10,000 to tweet specific messages to her followers on Twitter. Twitter announced that its users own their tweets and are free to do or say what they want, even if they want to sell their Tweets to advertisers.

Also, the new Twitter rules still allow third parties to place ads around Twitter feeds in other applications or next to Twitter search results, but they cannot resemble actual tweets. The new rules do not appear to affect those selling ads against Twitter search results (ie TweetUp, a startup founded by pioneer Bill Gross and search engines such as Google, Bing and Yahoo).

Since it was founded in 2006, Twitter was frequently used by a number of startups seeking to monetize the site. One of the largest and most prominent Twitter ad network, Ad.ly has signed up more than 70,000 Twitter users in hope of converting their Tweets into ad revenue. By doing so, they raised a $5 million first round of venture capital.

Though the move is not particularly surprising it is sure to have a critical impact on the third party ad networks. In Twitter's defense, they believe they have an obligation to their users to preserve the enduring value of the service and prevent third party ad networks from using the site since they are not necessarily looking to preserve the unique user experience.

For additional information on this article, click the link below.

http://adage.com/digital/article?article_id=144056

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