Many have written about in-tweet (also called in-stream) advertising. Just in the past few days, among many posts on this topic, Mark Suster asks whether it’s a good idea to have ads in tweets and concludes that it is (Mark is an investor in Ad.ly – one of the companies making possible in-tweet ads). Robert Scoble is not a fan of in-tweet advertising but points out that “people who produce content should be able to make a living for producing that content.” Nick Halstead, CEO of tweetmeme, argues that companies should leverage re-tweets for in-stream advertising. Seth Simonds asks whether he is worth money to his followers/reader. The discussion has even moved into the mainstream media – The New York Times cautions that A Friend’s Tweet Could Be an Ad.
The discussions around in-stream advertising are intellectually interesting. However, they obfuscate a bigger problem: in-stream advertising can (and I believe, will) destroy Twitter.
Here’s why: imagine if Google allowed paid search listings within organic search results. Sure, paid listings could be clearly marked as paid. Why has Google not done so? Because including paid listings within organic search results would compromise search.
What if Google allowed another type of transaction: imagine if Google allowed pages that attained a high PR value to sell the title or description meta tags (or both) to a third party for advertising purposes. If this was done, search results would be far less meaningful.
In each of the above examples, there is a predictable outcome. People would search less often. Fewer people would click on adwords ads. And Google’s core business model would suffer.
The impact of in-stream ads is further complicated by the recent search deals that Twitter signed with Google and Bing. Both search engines are now indexing tweets and the organic search results will contain sponsored tweets – the equivalent of having paid search listings within organic search results. This is a disaster waiting to happen – it’s precisely what Google has worked hard, for ten years, to avoid.
In-stream advertising threatens Twitter in much the same way. Some people won’t care, but many may object to seeing advertising in their streams. They’ll leave (or a competing service, without in-stream advertising, will present a more attractive venue for conversations).
I wonder whether we’re confusing two mostly unrelated issues when we talk about in-stream advertising. On the one hand, everyone recognizes that Twitter must ultimately find ways to monetize. On the other hand, Scoble is right that content producers should be able to make money for their content.
If the issue is how Twitter could make money, I believe there are better options than in-stream ads. While traffic to Twitter’s site appears to have flattened, Twitter has historically not done much to promote traffic to its site (until recently). An adwords-like program for Twitter search could be one way for Twitter to monetize. Twitter could require that Twitter clients incorporate a way to list advertising somewhere in a separate area of the client UI. Twitter could include ads in Twitter notifications. There are many more possibilities, and Twitter has some extremely smart people on its team that should and will figure out the right business model (when the time is right).
If the issue is how content producers (and companies that make Twitter clients, for example) can make money, that’s an entirely separate question. Content producers indexed in Google and Bing make money in many ways – but they are not directly paid merely because they appear in an organic search. The benefits are indirect (for example: people click on a link in a search result, find your product or service helpful, and buy it). Twitter should learn a lesson from Google and resist the efforts to directly monetize the content. While the short term benefits might seem nice, the long term consequences can be devastating to Twitter. Ben Kunz, in a comment to the post from Seth Simonds, nicely articulated a view I share:
In-stream ads are already out there. Some people are already making large sums of purportedly easy money by promoting products and services they know little or nothing about. I’m not so worried about their credibility – their followers will decide whether or not they should continue listening.
I am worried about Twitter’s credibility. It’s on the line.
What do you think?