This article was published on April 14, 2010

Twitter’s Plans For Monetization: Resonance

Twitter’s Plans For Monetization: Resonance

Twitter’s finally shed some light on their monetization plans, namely their promoted tweets plan.

Dick Costolo talked about Twitter’s plans for promoted tweets. Costolo said, “Promoted tweets are not ads. You can do everything you can do to a normal tweet to a promoted tweet.”

Companies will be able to take their favorite tweets for certain topics and then promote them so that they show up at the top of search results for certain keywords and hashtags.

Costolo claims this is a revolutionary model, as it combines earned media and paid media.

Since all of the functionality of a regular tweet is incorporated into promoted tweets, promoted tweets can be retweeted and replied to. By allowing companies to interact with users in real-time, Twitter hopes that companies will be able to create more interactive advertising.

Costolo also talked about “Resonance,” which he says will be a cost model based on the many ways companies interact with followers. He says that it measures “hashtags, clicks on hastags, retweets, retweets by power users” and other metrics. The score can be measured in real time and is the metric that determines which promoted tweets to display. The promoted tweets that resonate with users will stay in search results, while tweets that don’t resonate with users disappear.

This model will save advertisers money and keep search results relevant for users. However, Costolo was not sure about the resonance effects of promoted tweets. Once this is determined, the promoted tweets system will be switched to a resonance-based pricing model.

Costolo also mentioned how twitter will provide Resonance-based analytics to advertisers to show how and why certain tweets resonate with users. This will provide useful feedback for advertisers to optimize the resonance of their promoted tweets, which will (in turn) make Twitter more money. If a company increases their mean resonance scores, Twitter can charge them more for promoted tweets, which incentivizes these analytics.

This is an interesting model, and it lends credence to the assertions made by Costolo in November. This system is certainly more interesting than a simple pay per click model. Whether or not it’s more profitable remains to be seen.