Is it a Good Idea to Have Ads in Tweets?

Posted on Oct 29, 2009 | 100 comments


Advertising has driven the majority of Internet innovation

adly

My firm GRP Partners recently funded a young LA based company named Ad.Ly that is an “in-stream advertising” company currently focused on monetizing Twitter.  This has prompted many people to question whether advertising “in stream” and on Twitter is a good thing or a bad thing.  I understand that when people read about ads they initially have an aversion.  If that’s you – please read on.  I will argue that advertising funds many of the things you find near and dear and is actually a social good.

We’re clearly in the early stages on Twitter monetization but let me offer some views on why we find Ad.ly so compelling (other than the fact that the CEO Sean Rad is a great young technology leader and his advisers – Brian Norgard, Dan Gould and Evan Rifkin- are some of the guys I respect most in the LA tech market.)

So what do we mean by in-stream advertising?

OK, many of you will know this but just to base line.  Web 1.0 was the “static” web.  Traditional media companies published their stories on the web.  Web 2.0 was the 2-way web.  Turns out everybody likes to produce content and take part in the “conversation.”  Massive uptake of user-generated content including blogs (e.g. WordPress), video (YouTube), pictures (Flickr), review sites (Yelp) and collaborative content (Wikipedia).  Also, lost of people leaving comments on websites and having a dialog with other users.

Twitter-Stream-Sep09_3d

Image courtesy of Bernhardt Haussner

Turns out this conversation is pretty important and what many people want to do.  Facebook popularized the short-form “status update” and this initially is called the “feed” but over time starts to become known as the “stream.”  Twitter then popularizes the idea of having only a stream (e.g. not all the other applications that were competing for user attention in Facebook).  So we ended up with “real-time streams” in Twitter, Facebook, MySpace, Blip.FM, etc.  People rightly recognize that comments on blogs are just a form of a stream and thus the growth of open commenting platforms like Disqus and IntenseDebate.

But the most public and open stream right now by a long shot is Twitter.  And it is the most notable media darling not making any money so everyone is asking the question – how will they make money?  Many people have speculated a variety of revenue sources such as charging 3rd parties for their data, charging power users for their accounts, charging “verified users” for their certified accounts, etc.  But many people naturally revert back to the question if they should just show ads.

If anybody is to show ads you then need to decide: banner ads (how’d that go for MySpace?), contextual text ads (e.g. Google’s AdSense) or some other form of ad.  Banner or AdSense style ads placed either at the top of the page or down the right hand side (often called a skyscraper) would only net Twitter money for users that log into Twitter.com.  Remember, Twitter is as much of a data pipe as it is a website.  Much of the Twitter stream is read on third-party applications where Twitter doesn’t own the real estate to monetize it.  That is owned by people like Seesmic, Tweetdeck, UberTwitter and Tweetie.  And at least in the case of UberTwitter I can tell you they do run their own banner ads.

The other possibility is for the ad to go into the Tweet itself.  This means that if Kim Kardashian were to send a Tweet saying, “You’ve got to check out these awesome new jeans” and then a link to a website of a jeans provider the ad would be the Tweet itself.

Won’t users get pissed off is Tweets become ads?

It’s an interesting question and many people are trying to figure this out now.  See Jason Calacanis’ recent Tweet asking for his users’ opinions. FWIW, I don’t think asking for users’ input is the same as testing it and seeing reaction.  We’ve run enough campaigns to known that users have been tolerant of authentic ads.

If you’ve been around long enough like I have it seems like I’ve seen this movie many times before.  I remember in the mid-90′s when banner advertising started.  The first ads I remember were on HotWired.  Users were outraged.  “The Internet is free, you can’t make money off it!  It’s for all of us.  It’s not TV.”  Do you notice Jcalanybody complaining about banner ads these days other than from advertisers complaining that they’re not effective (80% of all clicks come from just 7% of all users and CTRs [click-through-rates] continue to drop dramatically).

I then remember when Amazon started selling books on the web.  That was a kerfuffle too.  I know that it sounds weird to those that don’t remember those days but people were pissed off that the Internet was becoming commercialized.  Next came search results based on people paying to be high in the result set.  My firm was an early investor in Overture (then called GoTo.com) who created this category.  As John Battelle chronicles in his brilliant (and must read) book, The Search, Google thought this idea stunk.  So did the media.  But it turns out that consumers didn’t think it sucked.  So Google launched Google AdWord and AdSense based in part on technology it acquired when it bought an LA-based company called Applied Semantics.

Then came blogs.

People got their knickers in a twist when they saw people like Michael Arrington and Robert Scoble having advertisers and endorsing brands on their sites.  These advertisements or mentions of endorsements in the text were always clearly denoted as advertisements.  Did you stop reading TechCrunch?

casablancarenaultrickSo that’s why I say I’ve seen the movie before.  Uproar.  “I’m shocked, shocked to find that advertising is going on in here.”

But come on, doesn’t it suck that we now have to advertising on Twitter?

No.  Advertising is great.  If there were no advertising on Google we would have no Gmail, no Google Maps, no Android, no Google Books.  Why?  Because they wouldn’t have the enormous amounts of profits that they’ve been able to sink back into research & development.  The same debate always occurs with the pharmaceutical industry.  If they can’t make profits off of drugs there will be no discovery and our future diseases won’t be cured.  Advertising is also what allows you to watch Hulu for free, use Yahoo! Finance and a host of other wonderful services brought to you by their sponsors.

Why do you think this form of advertising will be effective?

As we learned from our investment in Overture and the subsequent success of Google, “intent-based” advertising is enormously powerful.  When I as a 41-year old living in Santa Monica with 2 young boys type “Halloween Costume” into Google it is pretty clear that there is a highly likelihood or intent by me to shop for Halloween goods.  And if even 1% of users click on the ads because they’re relevant rather than on the organic search it’s a HUGE business (as you know).

People mistook the fact that these text advertisements worked in Google to say they would work in social networks.  After all, when I’m in Facebook they know one hell of a lot more about me than Google does.  So why not put up those Halloween Costume ads when I’m on Facebook?  It turns out that when I’m there I don’t have the same intent to purchase as I did on my Google search.  So PPC (pay-per-click) advertising on social networks has performed poorly to date.

Why am I excited about in-stream advertising then?  First, I have chosen who to follow on Twitter so the information in my stream is self selected.  It turns out that Twitter and other steams (including Facebook) are occupying an inordinate amount of Internet users’ time now.  I have to imagine that it will continue to suck time away from search as more people are discovering information from their friends and peers rather than seeking it out through search.

I divide the stream into 2 categories: one is the “I’m at dinner with so-and-so” Tweet.  The other is: check out this link!  Because Twitter is constrained to just 140 characters the real power of Twitter is link sharing creating what Jeff Jarvis and others have sometimes called the “link economy.”  When I choose who curates my information and when these people are Tweeting things such as, “I’m outraged by this Maureen Dowd OpEd” or “check out this video from last night’s game” our clicks go through the roof.   This is why many people are so excited by how much traffic they’re now generating from social media.  See Fred Wilson’s post on Twitter referring traffic.  The initial data we are seeing at Ad.ly about CTRs even on ads is very impressive.

Won’t people just ignore these ads and/or unfollow people who Tweet them?

twitter_unfollowI don’t think so.  For starters, if a non-parent Tweets out, “you gotta check out this baby stoller” it’s obvious that it won’t be very authentic.  I believe that authenticity is the key to successful in-stream advertising campaigns.  Obviously copy is also important so we obviously need to A/B test copy and link placement as well as demographic, geographic and psychographic performance.  We need to know which users have authority are therefore driving the highest conversions by category of ad and which channels drive clicks.

In the Ad.ly model each advertiser can choose which “publishers” (the person Tweeting) they want to make an ad available to (or not) and the publisher can choose whether they want to run the ad.  If the publishers aren’t running authentic ads they won’t convert well, the analytics will track the lack of performance and the marketplace will adjust.  The next campaign will be run with different publishers.

We have a responsibility to make sure that users always know it’s an ad.  So we label these Tweets clearly as ads.  But if you’re favorite movie star sends a Tweet saying, “Check out this trailer from my latest film” I don’t believe they will be unfollowed.  More than that – I’ve seen the data!

Won’t Twitter just do it themselves and crush you?

hans-and-franz-pump-you-up-characters-on-saturday-night-liveMaybe.  But I don’t think so.  I believe that Twitter is (rightly) more preoccupied with the growth of their network and the engagement levels of their users.  If people abandon Twitter to use Facebook’s stream then it won’t matter how much short-term money Twitter makes.  Just ask MySpace.  And I believe that Twitter has an interest in seeing some third-parties make tons of money out of their platform.

Why?  A healthy eco-system of application developers is required for any software or Internet company to be massively successful.  It creates free innovation on your platform that drives user growth and engagement.  If Ad.ly delivers significant revenues (which they share with the publishers) then the people who are driving real revenue for themselves have a vested interest in staying with Twitter.  They’re not currently monetizing their status updates on Facebook – I can tell you that much!

And if they can monetize their follower base then they have an incentive to grow their base, Tweet more, engage more and write better quality Tweets.  Everybody gains.  I believe Twitter will support this.

Don’t you worry that we’re just going to get overloaded with Twitter spam?

I used to.  But then I went to the Parnassus Group’s Twitter 140 conference run by Steve Broback and Brett Schulte.  I was simply BLOWN AWAY by the quality of innovation by 3rd-party Twitter developers.  It was like a whole shadow infrastructure to the Internet.  People were developing adds for meeting coordination, sending long-form Tweets, organizing a TV Guide, building follower lists, developing Twitter authority rankings, Twitter analytics platforms, etc.  So many I couldn’t mention them all. Check out TwtApps alone!

And then I saw many people developing Twitter spam filters.  Duh.  We have spam filters for our email.  We have it to filter blog comments.  Necessity is the mother of all invention.  Spam filters are coming to a stream near you.

Why do you believe Ad.ly will win?

Listen, it’s the first inning.  If we continue our success we will have strong competition.  That’s a good thing – it means there’s a market.  But 70% of my investment decision in early-stage companies is the team.  30% is the market opportunity.  This blog post is about why I think the market opportunity is large.  But I believe we have a good chance of winning because of the team.  The Founder & CEO of Ad.ly is Sean Rad.  He’s exactly what I look for in a technology CEO.  He’s product obsessed, visionary, inspirational and contagious to be around.  He’s mature well beyond his years.  When a 23 year old can comfortably sit with people in their 40′s & 50′s and converse about business and technology you’ve got somebody special.  People around him love him.  And he has high integrity.  He really wants to do this the right way.

Sean has been advised by three individuals who have spend the last few years doing behavioral targeting of advertisements.  They know a thing or two about the ad space.  All of them are really sharp on product and market.

We were in the market early so we won’t build a “me, too” product.  Our vision goes far beyond the first inning so anybody copying what we’ve built over the past year won’t necessarily see where the ball is going.  We think we know.  But as with any early-stage company: it’s a bit of skill, a bit of timing and a bit of luck.  I just remind Sean of the old adage, “the harder I work, the luckier I get.” ;-)

What do you think about advertising coming to Twitter and other streams?

Update

The topic is heating up as a result of this article in the NY Times.   We’ll see where all of this heads but let me point out one irony / hypocrisy.  Facebook is quoted as saying they don’t allow in-stream ads.  But they’ll happily serve up ads along side the stream.  In the first instance the person messaging would make 70%+ of the revenue in the second case they would make 0% (while Facebook would make 100%).  Let’s not be Pollyana-ish.  There is money at stake and people have vested interests.  But I believe that any in-stream advertising, if clearly denoted as such, should be fair game if done authentically.  Note that artists / musicians made zero out of advertising when they promoted social networks to fans.  These sites become popular in part due to these stars.  Letting them collect a percentage of the revenue for their efforts seems fair enough to me.

  • http://www.appwhirl.com Richard Jordan

    i think you're arguing apples and oranges

    it doesn't matter what users say they will use, it matters what commercial reality can be created to fund the creation and delivery of the content they use

    the only question that matters is what the market delivers through A/B testing, which is what TV effectively did over decades, and then as technologies change new models need to be found

    what you WANT, and whether you WANT to get ads in something is only relevant insofar as you act on that and you make up some portion of the market, which in the aggregate will make the decision

    your response seems not to understand that

  • http://markgslater.wordpress.com/ markslater

    but the costing side has also been flattened – there is no required subsidy. its like applying yesterdays media and advertising economics to todays reality. thats the real apples and oranges going on here.

    Yesterday – people suffered the inconvenience of 7 minutes of intrusion per hour because as you say it was understood that the economics dictated that in order to deliver the product this was required.

    Well today and most definitely tomorrow that rule simply does not apply – so why apply it?

    unsolicited messaging whether in micro format or not – will not survive. As the control continues to move over to me, i will logically (as will everyone else) turn this messaging off. Until i am ready.

    unsolicited messaging – whatever context or format is spam.

    and the cost of delivery requires absolutely no subsidy.

  • http://twitter.com/jameseliason James Eliason

    Congrats to the ad.ly team on their launch as well as your team for funding them. This is a space that has been lively for almost a year and a half, in which I have been knee deep in. While on the surface advertising on Twitter seems like something that is going to be widely successful, I would say that there needs to be a lot of work on the technology that we all use (i.e. Twitter). Without many changes on their end, our businesses and practices will be extremely limited. Again, congrats-

    Cheers,
    James Eliason

  • http://bothsidesofthetable.com msuster

    Thanks for the points. I should have mentioned this in my post – when you monetize through banner ads or CPC in social networks the publisher of the page gets zero. When you monetize in-stream the publisher gets a rev share.

  • http://bothsidesofthetable.com msuster

    Mark, at a minimum I appreciate your robust debate points. And I do understand your view as an individual. I do Tivo past many commercials. I do have “banner blindness” and I would be annoyed if I felt people I was following were spamming me in Twitter.

    But I'm not annoyed when Michael Arrington does as special post on TechCrunch in which he thanks and names his sponsors. I'm not offended when I go to a conference and a sponsor of the conference gets to stand up and talk about their company (as long as they don't drone on, which becomes inauthentic.

    I think Richard has it right. Individuals may at times not appreciate it but in aggregate we all accept the bargain if it's not abused.

    And the beauty of the market is – it will speak. We'll see what works. Stay in touch – let's keep the dialog going over time. I can be reached at my first name at grpvc dot com.

  • http://bothsidesofthetable.com msuster

    Totally agree. I've been meaning to do a write up on Filipe for a while but can't seem to find my notes! Thanks for your input in the debate with Mark Slater – I think you made good points which I agree with.

  • http://bothsidesofthetable.com msuster

    Thanks, James. I'm certainly aware of Twittad. Be in touch – would be interesting to share notes on the market evolution. I'm at my first name at grpvc dot com.

  • http://markgslater.wordpress.com markslater

    absolutely – always good to debate these issues.

  • coldbrew

    I have to agree with Slater here, especially about attempting to paste a monetization strategy from an old medium onto a new medium. I'll try to be brief noting only the most glaring issues:

    How do A/B testing and getting messages approved by 3 separate entities get you an authentic message? They don't. Word-of-Mouth is in real-time, it's impulsive.

    Twitter management has all but explicitly said they do not want a business model that looks like anything like this. Why? My guess is that they understand that lots of Twitter users are already out promoting something on their own, and there is little room for arbitrage. It is best to provide good tools and good, prompt data, and let the market sort it out on its own.

    When money is motivating any action, that action ceases to have the same authenticity. It reminds me of those social networks that tried to reward users for adding content, or Knol vs. Wikipedia.

    This model flies in the face of all the discussion surrounding the idea that one's friends and contacts will be the source of info regarding where to spend one's money, not Google. Whatever the final breakdown, Ad.ly certainly doesn't seem to be in the cards as a sustainable model.

  • Pingback: Is it a Good Idea to Have Ads in Tweets? | twitteradvertisingandmarketingtools.com

  • http://twitter.com/JackieTEwing Jackie Thorpe Ewing

    Great insights on ads and how we as humans react to and interact with them. Anyone's ability to communicate with their target audience in an effective and non-invasive way will ultimately bring them success at what they are doing. I, for one, look forward to the development of ads on Twitter to see how this generation does it!

  • http://www.willanjohnson.com Willan

    Mark – congrats on the investment. A few thoughts here. I think we all recognize that paid search works so well because the advertiser, publisher and user experience are so well aligned – all benefit from the interaction. Unfortunately, this is not true for most display advertising. Nor do I see this true with Ad.ly (today). It would be true if the tweets I was receiving were in fact authentic and sent without incentive (as I would truly be interested in what a friend had to recommend). But they are not. Rate limiting is an indication that this is one form of “spam”. It is also interesting to think about this in the context of email (sending out an ad for every 20 emails, etc.).

    But, all that said, I agree there is a market here. Or if not one today, certainly one that will develop in the coming years. Ad.ly is giving benefit to content creators – cool. Hopefully this will inspire more people to create interesting conversations and grow their audience (Twitter would certainly love that). The interesting things to watch (imho) are:
    – What becomes the market clearing price such that advertisers find enough value in the tweets as measured through ctr, sales, increase in purchase intent, etc)?
    – How will Ad.ly's margins be impacted as dollars are shared with both the publishers (tweeters) and partners (i.e., when Twitter comes knocking asking for their share)? And once the margins are impacted, will the dollars (benefit) to users be enough to motivate them to participate?
    – What advertising objectives play out best (branding, performance, local, etc). It seems like coupons, deals are stronger fit down the line (as this provides more value to the readers).

  • http://markgslater.wordpress.com/ markslater

    absolutely – always good to debate these issues.

  • http://twitter.com/gaganbiyani Gagan Biyani

    I missed the great debate between Slater and Suster, but I'm going to grab two quotes from the comments above and provide some additional thoughts.

    “When money is motivating any action, that action ceases to have the same authenticity.”
    Really? So the fact that Mark Suster posts because he is a VC and has an incentive to build his brand, that means that his comments are inauthentic? Sure, you could argue that they are somewhat less authentic, but does that minute difference mean a whole lot? Aren't a large amount of people's actions at least on some very small and fundamental level driven by money? I honestly just don't buy it. It is fairly clear to me that Mark Suster's point is simple: if ads are done right, they work just fine. If done wrong, they can be horrendous. So Twitter will never have interstitial ads before having to view a tweet nor will it ever put flashing monkeys flying across the screen, but what's wrong with publishers choosing to put some ads in-stream for products they like?

    “I personally despise ads. But i equally want to be marketed to when i decide.”
    This is from earlier, but I think this sentiment is pretty interesting. I spend a lot of my time interacting with “the real world.” As much as one can at least when so involved in Silicon Valley. I think that those of us who are involved in tech are extremely ad-averse, and that just isn't true of the general population. The general population doesn't love ads but doesn't hate 'em either. They do TiVo through commercials but don't mind the “Sponsored by Best Buy” at the beginning of a football game. I think contextual ads and private endorsements are not only accepted, but preferred, to a lot of advertising. Finally, ask a random guy on BART or MUNI or the metro in your own city: does it bother you that Google serves you ads before your search results? 50% of people will not even know that those “Sponsored results” are ads! It is shocking, but I've anecdotally noticed this type of ignorance. People are happy enough that websites Twitter, Facebook and YouTube are free, that a controlled amount of advertising isn't so bad. So even if those of us knee-deep in open source software and Firefox ad-blocker plug-ins hate ads, why does that mean they won't work for the general population?

  • coldbrew

    Biyani: It seems a bit convenient to cherry-pick a specific statement of mine to prove your point, but if that's all you got…

    People promoting a product or service where there is a direct payment involved for their doing so is not remotely analogous to Suster espousing ideas with some abstract notion of value creation in his brand.

    People like Oprah who have built audience trust over time (or even someone like Scoble) can operate in a similar way as is suggested by so many here. But, these people will not need Ad.ly, Magpie, Adtweets, etc

    The people that might be interested in stuff like this are exemplified by people like Jackie Thorpe Ewing (below) and the John Chow crowd. Chow was recently featured in a Vancouver paper and his blog post about it is linked below this post on Techmeme. Read the comments on that post to get an idea of the “target publisher” to which Ad.ly would appeal.

  • coldbrew

    I have to agree with Slater here, especially about attempting to paste a monetization strategy from an old medium onto a new medium. I'll try to be brief noting only the most glaring issues:

    How do A/B testing and getting messages approved by 3 separate entities get you an authentic message? They don't. Word-of-Mouth is in real-time, it's impulsive.

    Twitter management has all but explicitly said they do not want a business model that looks like anything like this. Why? My guess is that they understand that lots of Twitter users are already out promoting something on their own, and there is little room for arbitrage. It is best to provide good tools and good, prompt data, and let the market sort it out on its own.

    When money is motivating any action, that action ceases to have the same authenticity. It reminds me of those social networks that tried to reward users for adding content, or Knol vs. Wikipedia.

    This model flies in the face of all the discussion surrounding the idea that one's friends and contacts will be the source of info regarding where to spend one's money, not Google. Whatever the final breakdown, Ad.ly certainly doesn't seem to be in the cards as a sustainable model.

  • http://bothsidesofthetable.com msuster

    Thank you. I agree that it needs to be non-invasive or as much as possible. Finding the right balance will be key.

  • http://bothsidesofthetable.com msuster

    All good questions. It will be interesting to learn how things evolve.

    re: email – there are two kinds of offers. Total spam (boo, hiss) and offers that come from vendors I've accepted (hotels, airlines, babycenter, hautelook, etc.) If frequency capped these have value to me. Not always but a well placed email offering a discount weekend at the St. Regis or tickets to Bruce Springsteen would be welcome.

    With Ad.ly it is similar but not exact. You haven't accepted the advertiser necessarily but you have accepted the publisher. If they betray your trust you'll stop following them. If they occasionally bring you interesting offers I think people will appreciate it.

  • http://twitter.com/JackieTEwing Jackie Thorpe Ewing

    Great insights on ads and how we as humans react to and interact with them. Anyone's ability to communicate with their target audience in an effective and non-invasive way will ultimately bring them success at what they are doing. I, for one, look forward to the development of ads on Twitter to see how this generation does it!

  • http://www.willanjohnson.com Willan

    Yes, definitely get it. It might be interesting down the line to give recipients some choice (as part of the platform) into the type of offers they receive (which is a little of M. Slater's point). The rate capping at one of a day is kind of blunt. If the offers / ads are really interesting, then I may not mind 3 a day from certain friends (who are aligned with my interests and who deliver ads that are relevant to me), but not want any from other friends (i..e, who are constantly sending me ads about women's fashion, for example). Anyway, it will be interesting to follow.

  • coldbrew

    Suster: My apologies. I read the title of your post and thought the idea was to welcome debate and discussion. Of course, you might have simply labeled me a troll and dismissed my points without considering their merit. Fair enough. Good luck.

  • http://www.willanjohnson.com Willan

    Mark – congrats on the investment. A few thoughts here. I think we all recognize that paid search works so well because the advertiser, publisher and user experience are so well aligned – all benefit from the interaction. Unfortunately, this is not true for most display advertising. Nor do I see this true with Ad.ly (today). It would be true if the tweets I was receiving were in fact authentic and sent without incentive (as I would truly be interested in what a friend had to recommend). But they are not. Rate limiting is an indication that this is one form of “spam”. It is also interesting to think about this in the context of email (sending out an ad for every 20 emails, etc.).

    But, all that said, I agree there is a market here. Or if not one today, certainly one that will develop in the coming years. Ad.ly is giving benefit to content creators – cool. Hopefully this will inspire more people to create interesting conversations and grow their audience (Twitter would certainly love that). The interesting things to watch (imho) are:
    – What becomes the market clearing price such that advertisers find enough value in the tweets as measured through ctr, sales, increase in purchase intent, etc)?
    – How will Ad.ly's margins be impacted as dollars are shared with both the publishers (tweeters) and partners (i.e., when Twitter comes knocking asking for their share)? And once the margins are impacted, will the dollars (benefit) to users be enough to motivate them to participate?
    – What advertising objectives play out best (branding, performance, local, etc). It seems like coupons, deals are stronger fit down the line (as this provides more value to the readers).

  • http://twitter.com/gaganbiyani Gagan Biyani

    I missed the great debate between Slater and Suster, but I'm going to grab two quotes from the comments above and provide some additional thoughts.

    “When money is motivating any action, that action ceases to have the same authenticity.”
    Really? So the fact that Mark Suster posts because he is a VC and has an incentive to build his brand, that means that his comments are inauthentic? Sure, you could argue that they are somewhat less authentic, but does that minute difference mean a whole lot? Aren't a large amount of people's actions at least on some very small and fundamental level driven by money? I honestly just don't buy the argument that money always drives inauthenticity. Furthermore, it is fairly clear to me that Mark Suster's point is simple: if ads are done right, they work just fine. If done wrong, they can be horrendous. So Twitter will never have interstitial ads before having to view a tweet nor will it ever put flashing monkeys flying across the screen, but what's wrong with publishers choosing to put some ads in-stream for products they like?

    “I personally despise ads. But i equally want to be marketed to when i decide.”
    This is from earlier, but I think this sentiment is pretty interesting. I try spend a lot of my time interacting with “the real world” – you know, talking to bartenders or the guy next to me on the plane (I fly 4 flights a week). As much as one can at least when so involved in Silicon Valley. One thing I've noticed is that those of us who are involved in tech are extremely ad-averse, and that just isn't true of the general population. The general population doesn't love ads but doesn't hate 'em either. They do TiVo through commercials (if they remember to record the show) but don't mind the “Sponsored by Best Buy” at the beginning of a football game. For these people, I think contextual ads and 'endorsement ads' are not only accepted, but preferred, to a lot of advertising. They don't even understand the concept of affiliate marketing and don't realize that the publisher gets a kickback when you buy a product on Amazon. To test this theory, ask a few random folks in non-tech jobs (bartenders, subway restauranteurs, just chat it up with them!): does it bother you that Google serves you ads before your search results? 50% of people will not even know that those “Sponsored results” are ads! It is shocking, but I've anecdotally noticed this to be true. People are happy enough that websites Twitter, Facebook and YouTube are free, that a controlled amount of advertising isn't so bad. So even if those of us knee-deep in open source software and Firefox ad-blocker plug-ins hate ads, why does that mean they won't work for the general population?

    (p.s. one great example of the fact that the tech and “rest of the world” populations are different is Angie's List. I don't know how-the-f they are successful, given that craigslist and Yelp are both free and the flagship of the tech communities, but Angie's list actually dares to charge users and is doing quite well with that model. A surprising but interesting development in the “all software should be free” debate)

  • coldbrew

    Biyani: It seems a bit convenient to cherry-pick a specific statement of mine to prove your point, but if that's all you got…

    People promoting a product or service where there is a direct payment involved for their doing so is not remotely analogous to Suster espousing ideas with some abstract notion of value creation in his brand.

    People like Oprah who have built audience trust over time (or even someone like Scoble) can operate in a similar way as is suggested by so many here. But, these people will not need Ad.ly, Magpie, Adtweets, etc

    The people that might be interested in stuff like this are exemplified by people like Jackie Thorpe Ewing (below) and the John Chow crowd. Chow was recently featured in a Vancouver paper and his blog post about it is linked below this post on Techmeme. Read the comments on that post to get an idea of the “target publisher” to which Ad.ly would appeal.

  • http://bothsidesofthetable.com msuster

    Thank you. I agree that it needs to be non-invasive or as much as possible. Finding the right balance will be key.

  • http://bothsidesofthetable.com msuster

    All good questions. It will be interesting to learn how things evolve.

    re: email – there are two kinds of offers. Total spam (boo, hiss) and offers that come from vendors I've accepted (hotels, airlines, babycenter, hautelook, etc.) If frequency capped these have value to me. Not always but a well placed email offering a discount weekend at the St. Regis or tickets to Bruce Springsteen would be welcome.

    With Ad.ly it is similar but not exact. You haven't accepted the advertiser necessarily but you have accepted the publisher. If they betray your trust you'll stop following them. If they occasionally bring you interesting offers I think people will appreciate it.

  • http://www.willanjohnson.com Willan

    Yes, definitely get it. It might be interesting down the line to give recipients some choice (as part of the platform) into the type of offers they receive (which is a little of M. Slater's point). The rate capping at one of a day is kind of blunt. If the offers / ads are really interesting, then I may not mind 3 a day from certain friends (who are aligned with my interests and who deliver ads that are relevant to me), but not want any from other friends (i..e, who are constantly sending me ads about women's fashion, for example). Anyway, it will be interesting to follow.

  • coldbrew

    Suster: My apologies. I read the title of your post and thought the idea was to welcome debate and discussion. Of course, you might have simply labeled me a troll and dismissed my points without considering their merit. Fair enough. Good luck.

  • sidviswanathan

    Mark, great post! Was wondering how you think the marketplace will evolve over time especially for top tier publishers on Twitter. Each publisher probably has a varying threshold for the amount of ads they will endorse vs. their actual tweets. Over time, will this just turn into a bidding war where the highest bidder gets access to the top-tier publishers. Seems like a win for the publisher and Adly, but what about for the overall in-stream advertising ecosystem? Will this create a marketplace where only the top brands/businesses can realistically afford a campaign with a top-tier publisher? This is an interesting supply/demand problem. I think as the ecosystem evolves, the demand for advertising will greatly surpass the supply of publishers (and their willingness to exceed their threshold for ads from their account). What happens then?

  • sidviswanathan

    Mark, great post! Was wondering how you think the marketplace will evolve over time especially for top tier publishers on Twitter. Each publisher probably has a varying threshold for the amount of ads they will endorse vs. their actual tweets. Over time, will this just turn into a bidding war where the highest bidder gets access to the top-tier publishers. Seems like a win for the publisher and Adly, but what about for the overall in-stream advertising ecosystem? Will this create a marketplace where only the top brands/businesses can realistically afford a campaign with a top-tier publisher? This is an interesting supply/demand problem. I think as the ecosystem evolves, the demand for advertising will greatly surpass the supply of publishers (and their willingness to exceed their threshold for ads from their account). What happens then?

  • sidviswanathan
  • sidviswanathan

    Mark, great post! Was wondering how you think the marketplace will evolve over time especially for top tier publishers on Twitter. Each publisher probably has a varying threshold for the amount of ads they will endorse vs. their actual tweets. Over time, will this just turn into a bidding war where the highest bidder gets access to the top-tier publishers. Seems like a win for the publisher and Adly, but what about for the overall in-stream advertising ecosystem? Will this create a marketplace where only the top brands/businesses can realistically afford a campaign with a top-tier publisher? This is an interesting supply/demand problem. I think as the ecosystem evolves, the demand for advertising will greatly surpass the supply of publishers (and their willingness to exceed their threshold for ads from their account). What happens then?

  • http://bothsidesofthetable.com msuster

    Where did I dismiss your points? Am I missing something?

  • http://bothsidesofthetable.com msuster

    Where did I dismiss your points? Am I missing something?

  • http://bothsidesofthetable.com msuster

    Some good questions. I think we'll have to watch this space and see how it evolves. I don't think anybody has the answers.

  • http://bothsidesofthetable.com msuster

    Some good questions. I think we'll have to watch this space and see how it evolves. I don't think anybody has the answers.

  • Pingback: Addressable TV Is Not Here; Digital Agencies Leadership; Google DoubleClick Ad Exchange Works

  • Pingback: Tie-ISB 2009: Growth, Funding and Partnerships – Part 2 « In Search of Meaning

  • http://radj.blushama.com radj

    IMO, I like Twitter because it gives me updates straight from the people I follow. If they start putting ads in stream, then I lose the reason why I use twitter. But that's just me, and for my need.

  • Raja Mandava

    Frankly i feel there shd be way for twitter or third party users to moentize someway..otherwise we are gng to kill innovation. But at the same time i fell thr shd be lot of analytics shd go in tweeting ads to particular user. for example a person who is interested in household items shd able to receive primarily catering to them. And if this category is easily changeable based on user requirements that would be great as user needs changes with time. For ex when i want to buy house..i try to receive ads related to real estate..but once i bought my necessities may change. And moreover i feel thr shd be some limit on number of ads user can recieve a day for example in scale of 5,10 etc. This wil enable ad generators to carefully place ad and it also improve authenticity of ad.

    Don't remember to pay twitter also some small percentage :)

  • http://bothsidesofthetable.com msuster

    Raja, I agree. What I believe you're essentially saying is that ads need to be finely targeted. It will take time but the winning player will do what you have outlined over time.

  • http://radj.blushama.com radj

    IMO, I like Twitter because it gives me updates straight from the people I follow. If they start putting ads in stream, then I lose the reason why I use twitter. But that's just me, and for my need.

  • Raja Mandava

    Frankly i feel there shd be way for twitter or third party users to moentize someway..otherwise we are gng to kill innovation. But at the same time i fell thr shd be lot of analytics shd go in tweeting ads to particular user. for example a person who is interested in household items shd able to receive primarily catering to them. And if this category is easily changeable based on user requirements that would be great as user needs changes with time. For ex when i want to buy house..i try to receive ads related to real estate..but once i bought my necessities may change. And moreover i feel thr shd be some limit on number of ads user can recieve a day for example in scale of 5,10 etc. This wil enable ad generators to carefully place ad and it also improve authenticity of ad.

    Don't remember to pay twitter also some small percentage :)

  • http://bothsidesofthetable.com msuster

    Raja, I agree. What I believe you're essentially saying is that ads need to be finely targeted. It will take time but the winning player will do what you have outlined over time.

  • http://www.r4-ds.com.ar/ r4 card

    Thanx for the valuable information. I think it is a very badd idea to have ads in tweets…….
    keep posting. Will be visiting back soon.

  • http://www.r4-ds.com.ar/ r4 card

    Thanx for the valuable information. I think it is a very badd idea to have ads in tweets…….
    keep posting. Will be visiting back soon.

  • Pingback: Paid Content

  • Pingback: Dominiando » Inside Word: In Defense Of Ads In Twitter

  • Pingback: Technet – Feeds Aggregator from Technology » Inside Word: In Defense Of Ads In Twitter

  • interactivemix

    Excellent article with a great sense of history and knowledge. Couple of things from another old timer that I think need to be added. Advertising worked in Google because it gave the customer an ad about the thing they were interested in at exactly the point in time they were interested in it. Ads on Twitter isn't a religious debate its a logistics debate. The argument for intrusive ad placement online is pretty much done and dusted with very few click throughs and an arguable brand value. Twitter needs to follow Google's leads of magnetised advertising rather than reaching for the megaphone. If that kind of approach is used then I think there will be the traditional outcry followed by a lot of people placing a lot of ads and Twitter making a lot of money.

    One other thing though, as much as I would love to agree that the internet innovation was spearheaded by the advertising industry, I think that history shows quite clearly that accolade goes to the pornography industry. First sites to get major traffic, first sites to encourage users to part with cash on the site, first sites with chargeable advertising models, first sites to add sound and video etc. The list goes on. If it doesn't have an application online for porn, it probably doesn't have an application.

    Aaron Savage
    Interactive Mix Ltd
    http://www.interactive-mix.com