Thursday, May 19, 2011

Twitter’s Advertising Dilemma

Social media websites are a great idea. They attract millions of users every day, yield incredible amounts of user-generated content, and are hyped up by organizations and media outlets alike. They can be accessed via phone, computer, or tablet from almost anywhere in the world at any moment in time. However, until recently many of these websites have not developed a business model to generate profit or even keep themselves financially stable.

Twitter has been searching for a viable revenue model for some time now. Twitter is a pretty unique social media channel; it does not feature visual ads along the sides or bottom of its webpage like Facebook or Myspace do. It does, however, feature sponsored tweets, trends and accounts. Companies can now pay Twitter to feature their content as a popular tweet or to promote a specific hashtag as a trending topic. Twitter has also begun to promote company accounts under its “Who To Follow” section. Users buy into this advertising method, regularly using the promoted hashtags and following the sponsored accounts. While these are good methods for Twitter to begin generating revenue, the social media website will have to think of more innovative ways to make money if it wants to stay in business for a long time.

Advertisements on Twitter no longer solely come from Twitter’s business end; individual accounts are beginning to take a slice of advertisement money as well. Accounts have always indulged in shameless self-promotion (think Charlie Sheen), but now some high-visibility accounts are beginning to sell ad space in their timelines. Take @Lord_Voldemort7 for instance, an account with over 1 million followers that tweets in the voice of the Dark Lord from J.K. Rowling’s Harry Potter series. On May 18, 2011, the account tweeted, “If you fail this 'kissing quiz' then you are probably not cut out to be a dementor... - ad.” This tweet is not alone; the Dark Lord is apparently a fan of everything from Samsung cameras to other social media websites and tweets about them a few times a week.

Using an account in this way does not currently violate Twitter’s Terms of Service agreement, but it is taking advertisement dollars away from and may cause ethical problems. Advertising this way is ethical as long as the account indicates that the tweet is an advertisement, but what if an account fails to do so? Will Twitter update its Terms of Service agreement to ban for-profit tweeting? Furthermore, will frequently tweeting advertisements reduce followers and credibility? These are all things to consider before leasing space on your account to companies looking to gain an edge on their competition.

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