What Does Twitters New Advertising Announcement Mean?

In case you missed it Twitter made a announcement yesterday that they will be banning all 3rd party companies from using the API to put ads into Twitter. Here is the official quote from Twitter CFO Dick Costolo:

Why are we prohibiting these kinds of ads? First, third party ad networks are not necessarily looking to preserve the unique user experience Twitter has created. They may optimize for either market share or short-term revenue at the expense of the long-term health of the Twitter platform. For example, a third party ad network may seek to maximize ad impressions and click through rates even if it leads to a net decrease in Twitter use due to user dissatisfaction.

Secondly, the basis for building a lasting advertising network that benefits users should be innovation, not near-term monetization. Twitter is uniquely dependent on and responsible for the long-term health and value of the platform. Accordingly, a necessary focus of Promoted Tweets is to explore ways to create value for our users. Third party ad networks may be optimized for near-term monetization at the expense of innovating or creating the best user experience. We believe it is our responsibility to encourage creative product development and to curb practices that compromise innovation.

of maintaining the network, protecting the Tweet stream against spam, supporting user requests, and scaling the service. Indeed, Twitter will bear many of the support costs associated with any third-party paid Tweets, as Twitter receives support emails related to anything a user sees in a tweet stream. The third-party bears few of these costs by comparison.

ShoeMoney corporate bullshit un-filter:

Everybody is making money off of Twitter BUT Twitter. And we are doing all the work and incurring all the costs!

Last night Sponsored Tweets CEO Ted Murphy posted how they are moving forward in a well written out blog post.  Basically stating they are proceeding ahead… just without the API.

The other big kid on the Twitter advertising block Ad.ly,  who just days ago closed on raising another 5 million dollars put out a statement saying:

Ad.ly supports Twitter’s movement today to create standards around in-stream advertising.   Twitter’s changes are aimed at discouraging members of the ecosystem who do not maintain the proper balance of user experience and monetization and who are not invested in building long term value on the platform.

Since inception, Ad.ly has, and still is operating under Twitter’s approved guidelines and terms of service for advertising on its platform. We look forward to continuing to create long term value for our advertisers and publishers, both of whom are key constituents in the stream ecosystem.

ShoeMoney corporate bullshit un-filter:

We really hope Twitter buys us!

I spoke to both Ted Murphy (IZEA CEO) and Sean Rad (Ad.ly Founder) last night and neither said they had any indication from Twitter what so ever that something like this was coming.

So ok… Lets cut to the chase. What does this mean? Well for me its good news (or should I say for our charity) ! But for 95% of people that were making money with twitter its very bad news. Why?

Well here is from my point of view-

Twitter Advertising Before Networks:

Before these networks existed we had advertisers contact us through this blog (we are easy to find and contact) and offer us money to tweet. We got between $800 and $1500 per tweet. These were from some pretty large advertisers… The funny thing? Always in their requirements they specified that we NOT DISCLOSE that we were being paid to tweet.

  • I got paid more money per tweet on average (skipped the middle man).
  • I had more negotiating power (could bundle in advertising deals or paid blog posts).
  • Did not have to disclose they were paid tweets.

Twitter With Networks:

  • Made much less money.
  • Less editorial control.
  • Occasionally had to re-tweet offers if advertiser did not get enough clicks (even though the ad sucked).
  • Paid tweets had to contain full disclosures.

With networks companies can goto Sponsored Tweets or Ad.ly and dump 500k or so on publishers… the networks take a cut but virtually anyone can make money.

But now without networks how are companies going to find the little guys?

Its going to be interesting.

Full Disclosure – I am currently on the board of advisors for Ad.ly and receive compensation for serving that role. I was previously on the board of advisors for Sponsored Tweets and received compensation for that role also.