How Far Will Twitter Go With Advertising?Remember when everyone wondered how Twitter would start making money? In 2011, Twitter proved it could successfully sell advertising without damaging the user experience. It did that through its Promoted Tweets, Promoted Trends, and Promoted Accounts products.

As it turned out, advertisers got great results too. Engagement rates are reportedly high and renewal rates are impressive. Now, everyone wonders: How far will Twitter go with advertising? Where will Twitter stop with advertising?

Let’s take a look at the key indicators that suggest Twitter is still at the beginning of its path to leveraging advertising opportunities.

Social Network or Media Company?

Social Network or Media Company?

As far as selling ad space goes, the top social sites are turning into media companies. Facebook, Google, and Twitter are in a race to boost social data acquisition and advertising revenues, and each company is enjoying great success in those areas. Google reportedly earns $30 billion per year on search ads and Facebook makes millions from its own advertising program. Is it really surprising that Twitter is rolling out advertising programs as well?

The surprising part is that the company is moving so slowly. As a private company, Twitter still has the luxury of making decisions for the benefit of its customers as opposed to its shareholders. Of course, if rampant IPO or acquisition rumors come true in 2012, that strategy may change.

New Features, Acquisitions, and Expansion

New Features, Acquisitions, and Expansion

Recently, Twitter launched a redesign that makes the site ripe for advertising. Twitter’s “Discover” feature is billed as a tool to gather curated content that members are interested in at any given time. Members are encouraged to use Discover because the more they use it, the better the relevancy of the content that will be provided to them. It’s a step in the right direction for Twitter to gather social data, increase ad targeting potential, and attract more advertisers.

This month, Twitter acquired Summify, a tool that “discovers” content from the Twitter feeds people follow and delivers that content in an aggregated format, making it easier for people to access content that matters to them. This acquisition seems like a complementary fit for Twitter’s new Discover feature and opens even more opportunities for selling targeted ad space, based on relevant content.

Features and acquisitions aren’t the only ways Twitter is creating more advertising opportunities. For example, Twitter started accepting political ads in 2011. The company also opened a new advertising sales office in London showing its intention to expand advertising to a global audience.

Furthermore, Twitter’s self-serve advertising program is still in beta. When that tool rolls out to a wider audience of small advertisers, Twitter stands a greater chance to compete with the likes of Facebook, where self-serve advertising reportedly accounts for 60 percent of the company’s overall ad revenue.

More Ad Formats

More Ad Formats

Currently, Twitter offers three primary ad formats to large advertisers with deep pockets — Promoted Tweets, Promoted Trends, and Promoted Accounts. It’s safe to assume that these three ad formats won’t be the only choices for long. For example, a recent banner ad on General Electric’s Twitter profile piqued interest in how and when Twitter might launch banner ads to a wider audience of advertisers.

So far, ads on Twitter have been fairly unobtrusive and generally well-received given their relevancy and usefulness. As long as the proliferation of ads doesn’t damage the overall Twitter experience, people may be unlikely to complain too loudly about advertising on the platform.

On the other hand, waiting so long to monetize the site could prove to be a problem for Twitter, simply because people are so used to an ad-free experience. As more ad formats and advertisers enter the space, a member backlash is always possible. There is no doubt that Twitter will continue expanding site advertising and integrating ad sales with the availability of social data. The question is if and when Twitter users will stand up and say, “That’s enough!” Until then, it’s a safe bet to assume that advertising will become more frequent and prevalent on Twitter.

[Image credits: Maria Hagglof, Zack Shakleton, Task Force on Financial Integrity and Econ Development, Tenz]