To Advertisers, Twitter's a Fledgling - Emily Steel and Amir Efrati

Twitter offers “Promoted Tweets,” where marketers pay to have their messages listed as the first result when a user conducts a search on Twitter.com; the site handled about 130 million searches in August, according to comScore Inc. The company soon will experiment with ads that target users based on the content in their tweets, or messages.

Marketers who tried out Twitter’s new advertising product at launch didn’t pay for the initial tests, according to two digital-ad executives. Now, Twitter is selling Promoted Tweets for upwards of $100,000.

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For Twitter, a four-year-old service, much is riding on its efforts to woo Madison Avenue in its first serious attempt to generate revenue. The San Francisco start-up was valued at about $1 billion during a recent financing, according to people familiar with the matter. Twitter executives say their ad push has just begun and they are under no pressure to show revenue growth anytime soon, so long as users continue to flock to the service.

Twitter executives say the ad products have exceeded expectations. Chief Operating Officer Dick Costolo said that on average 5% of Twitter users who saw a Promoted Tweet interacted with it, a rate that is “an order of magnitude greater” than most online ad campaigns.

Nearly 80% of the companies who tried Twitter’s Promoted Tweets or a similar ad product known as Promoted Trends made a second buy, a Twitter spokesman said.

my two cents

Twitter is experimenting with relatively conventional advertising. Fine, that’s what huge brands understand. But the radical — and social angle — is localization of advertising, so that folks that tweet daily from Soho get an invitation to a new wine bar.

There is no doubt that creating the ad infrastructure to support microadvertising is more complex than creating deals with 50 major brands, but that’s the breakthrough that will power Twitter’s growth in the next five years.