For what seems like forever, Twitter has been the white-hot startup staring at a critical, unanswered question: How will it translate hype, and seemingly never-ending traffic growth, into profits?

Yesterday the company announced its intentions to offer corporationshbr_130x130 the opportunity to sponsor Tweets. So-called “Promoted Tweets” will appear when people search for particular terms. Only a single sponsored Tweet will appear alongside search results. The Tweet will appear as long as it demonstrates “resonance” with the audience by being clicked or re-Tweeted. Twitter doesn’t plan to charge companies whose sponsored Tweets don’t generate high resonance. Presumably Tweets with high resonance scores will pay price premiums.

What’s to like about this move? While it’s easy to dismiss “Promoted Tweets” as just another advertising play, Twitter’s attempt to measure resonance is intriguing. Remember, companies don’t advertise for advertising sake. Rather, they advertise to help them achieve other business objectives, such as attracting new customers, or further enhancing brand loyalty. Finding novel ways to track the impact of advertising — and pricing that advertising accordingly — carries interesting potential.

Also, Twitter recognizes that its quest to develop its business model is just beginning.

Read the Full Article at harvard Business review

Scott D. Anthony is managing director of Innosight Asia-Pacific.

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