First, to all the Twitter lovers out there: This is not the first sign of the apocalypse. Of all the places Twitter could include ads, this is the least obtrusive and the most relevant. People will not desert Twitter for this. It's inevitable -- technology services need revenue.
Not only that, I expect it to be successful. Searches on trending topics are an inevitable place for mass market ads. But searches on other hashtags are also likely to generate interest from advertisers, and relevant ad tweets make sense here. If a T-shirt company puts ad tweets into searches on "Lady Gaga" and "#LadyGaga," good for them. As with Google, these ads will fit nicely into the organic searches.
Should you, the marketer, buy these ads? Yes! Twitter participants are highly influential. At first, the ads will be cheap. You want to learn this product as soon as possible. Recommendation: keep the promotion mild at first, to avoid a backlash. Just go for awareness, and include a link for people who want to learn more.
Twitter could screw this up by allowing too many ads, but they won't. They will keep the load light and the cost as high as the market will bear. Following Google's lead, I expect they will implement auctions.
This is not the end of the ads, either. But Twitter can take its time figuring out how, if at all, to put ads in regular tweet streams. This has far more potential for backlash.
If you think your Twitter client (like Tweetie for iPhone or Tweetdeck) will screen out the ads, think again. Expect Twitter to require users of its API to include promotional tweets.
At the end of last year, we predicted that in 2010 Twitter would either develop a $100 million annual revenue stream, or get bought. Based on this announcement, look for the $100 million revenue stream.
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