[Infowarrior] - A Friend’s Tweet Could Be an Ad

[Richard Forno]

A Friend’s Tweet Could Be an Ad
http://www.nytimes.com/2009/11/22/business/22ping.html

By BRAD STONE
Published: November 21, 2009
Tuesday was another typical day for John Chow, blogger and Internet  
entrepreneur in Vancouver, British Columbia. Mr. Chow treated his  
50,000 Twitter followers to a photograph of his lunch (barbecued  
chicken and French fries), discussed the weather in Vancouver and  
linked to a new post on his Internet business blog.

Then he earned $200 by telling his fans where they could buy M&M’s  
with customized faces, messages and colors.

Mr. Chow is among a growing group of celebrities, bloggers and regular  
Internet users who are allowing advertisers to send commercial  
messages to their personal contacts on social networks. For the last  
month, he has used the services of Ad.ly, a start-up based in Los  
Angeles, and Izea, based in Orlando, Fla., to periodically surrender  
his Twitter stream to the likes of Charter Communications, the Make a  
Wish Foundation and an online seminar about working from home.

In October, Mr. Chow’s income from Twitter ads was around $3,000. “I  
get paid for pushing a button,” he said.

It is perhaps the last frontier in advertising — getting regular  
people to send a sentence or two of text, on behalf of paying  
advertisers, to their friends and admirers. The idea, according to the  
entrepreneurs who are developing such services for Twitter and other  
Web networks, is that people trust recommendations from those they  
know and respect, while they increasingly ignore nearly ever other  
kind of ad message in print, on television and online.

Even the Internet giants are warming to the idea of harnessing  
informal chats between friends to promote their products and services.  
This month, Amazon.com said it would start paying commissions to  
individuals who refer buyers to the site via Twitter messages. (People  
must first sign up for Amazon Associates, a program in which Amazon  
pays Web publishers for referrals to its site.)

But the bigger opportunity may be in matching advertisers with so- 
called influencers — the more popular users of services like Twitter.  
A number of start-ups, like Ad.ly, Izea and Peer2, a division of  
Creative Asylum, a Hollywood ad agency, are pursuing the opportunity  
to put persuasive messages into regular dialogue on social networks.

“We don’t want to create an army of spammers, and we are not trying to  
turn Facebook and Twitter into one giant spam network,” said Joey  
Caroni, co-founder of Peer2. “All we are trying to do is get consumers  
to become marketers for us.”

For the most popular celebrities and bloggers on Twitter, such  
advertising can generate a surprisingly sizable payday. Ad.ly and  
Izea, which runs a service called Sponsored Tweets, say celebrities  
like Kim Kardashian, Dr. Drew and the musician Ernie Halter can earn  
up to $10,000 by sending a single message to their hundreds of  
thousands of followers. (Sample ad Tweet from Mr. Halter, which  
included a link: “sponsored: yo! cheese doodles is giving away sweet  
prizes in the “rock the cheese” video contest. Check it!”)

Izea receives at least 15 percent of the advertiser’s payment to more  
popular Twitter users, and up to half for the less distinguished.  
Ad.ly takes a 30 percent cut across the board. While both companies  
note their celebrity connections and the involvement of big  
advertisers like Microsoft and NBC, they really salivate at the  
prospect of marrying less notable Internet personalities with the huge  
pool of smaller advertisers.

For example, an expert on cycling, with 1,000 Twitter followers, might  
agree to send an ad about a new bike helmet — a message that might  
well be implicitly trusted by his followers.

One problem is that many Internet users eschew the idea of these ads,  
saying they commercialize authentic dialogue and undermine people’s  
credibility. “It interferes with your relationship with your friends  
and your audience,” said Robert Scoble, a technology blogger with more  
than 100,000 followers on Twitter, who says he “unfollows” people on  
Twitter who send him ads.

Facebook does not allow members to insert paid ads into status updates  
or profiles. “For us, it goes against the authenticity of the page,”  
said Brandon McCormick, a Facebook spokesman. Peer2 gets around the  
ban by offering users points instead of dollars; points are redeemable  
for Amazon products.

Part of the unease with this emerging form of advertising is rooted in  
the past. Three years ago, with a service called PayPerPost, Izea paid  
bloggers to pitch products to their readers. The endorsements were not  
clearly labeled as ads, and the service kicked up a dust storm of  
criticism in the blogosphere.

Ted Murphy, the C.E.O. of Izea, now a 30-person business backed by $10  
million in venture capital, said the company initially “made a big  
mistake” by not setting disclosure standards for publishers and  
advertisers. Today, ad networks promote their standards; Izea’s ads on  
Twitter are typically demarcated with signifiers like “#ad” or  
“#sponsor.”

ONE new company trying to add transparency to the business is  
Likes.com of San Francisco, which plans to introduce its ad network in  
December. The company encourages bloggers and Twitter users to specify  
their tastes in restaurants, movies, books and other products, and  
then to publish those recommendations to their blogs and social  
network pages.

Advertisers can then see who has favored their products in the past,  
and how effective their recommendations have been at getting people to  
click on links. Depending on the advertiser, bloggers and Tweeters  
will be paid for every ad they send out, or every time someone clicks  
on the link.

Every Likes.com ad is clearly labeled as such, and once people click  
on a link, they are taken to another page that is also clearly labeled  
as a sponsorship. People are limited to posting an ad from Likes.com  
once every other day.

“We are trying to limit it, to prevent people from losing their  
following,” said Bindu Reddy, a former Google product manager who  
started the company with her husband, Arvind Sundararajan, a former  
Google engineer. “We know people are queasy about this.”