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As reported in The New York Times and elsewhere, Twitter has taken a big step toward more substantial monetization with a new “Promoted Tweets” program. It’s essentially a form of search marketing, where sponsored tweets will take the top spot in Twitter search results.

One promoted tweet will appear per search results page and include small text indicating it’s sponsored. Further delineation from “organic” tweets will come from yellow shading that appears when promoted tweets are moused over. Otherwise, they’ll look and act just like normal tweets.

Twitter will pull the promoted Tweets that aren’t “resonating” with users. It will determine this through a proprietary algorithm that weighs replies, retweets and clicks. According to its terms of service with advertisers, they won’t pay for any promoted tweets that have been pulled.

Ad partners so far include Starbucks, Best Buy, Virgin America and Bravo. At the onset, they’ll pay on a CPM basis until Twitter is able to learn more about how users react and engage the ads. Performance-based pricing will likely follow.

Twitter plans in the future to allow third-party clients to integrate promoted tweets and share a slice of the ad revenues. It will also expand promoted tweets from search results to individual Twitter users’ feeds.

In other words, your Twitter home screen where you see the tweets of those you follow will be joined by the occasional sponsored tweet. This will involve contextual targeting based on the subjects you tweet about.

Twitter appears to be allowing itself some wiggle room based on how users react. This is probably smart, given the challenge of turning on the monetization switch for something that’s erstwhile been a “free lunch.”


Update: TechCrunch reports on early user reaction to the news.

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