This request came from Ad.ly, the in stream advertising company that is run and was started by a friend of mine Sean Rad. Sean was funded last year by a very well respected VC, Mark Suster of GRP. What I really like about what Sean is building is his focus on “streams” and not only Twitter. Obviously, Twitter is the webs strongest stream today, but many services are going to the stream model & this will be a huge opportunity.

This is the email that I received, a request to tweet this appropriately called out (Ad) for a total of $4.23. So, as a starving entrepreneur I decided to get my $4 bucks.

I clicked ‘Approve’ shortly after I got the email and this was the result…

For $4 bucks, I’d say it was totally worth the tweet. I do think it would be a pretty shady practice if that little “(Ad)” was not included in the tweet however.

Maybe the most interesting realization after the tweet was to see my friends/followers respond to the tweet. I had about 2 people tweet me to call me out for selling out my stream, 1 person who thought my account was jeopardized or hacked and then friends just curious about my tweeting ads. Friendly concern.

So, would I tweet more ads in the future? Possibly. I can tell you that I’ve turned a couple other tweet requests down, so I won’t be tweeting just anything (my stream is respected, I love you guys) so I’ll keep it pretty clean. However, I’m not apposed if I’ve used the services that are included in the sponsored tweets.

Twitters Solution

Twitter is executing a similar behavior by promoting tweets within Twitter searches. I’m still skeptical about how much people actually use Twitter to search, but like anything the search behavior on Twitter, will grow. Twitter posted on their blog this answer to the question about promoted tweets.

Q: What are you launching? What are Promoted Tweets?
A: We are launching the first phase of our Promoted Tweets platform with a handful of innovative advertising partners that include Best Buy, Bravo, Red Bull, Sony Pictures, Starbucks, and Virgin America—with more to come. Promoted Tweets are ordinary Tweets that businesses and organizations want to highlight to a wider group of users.

What this means is that when someone searches for “coffee”, Starbucks will have a tweet (like the one above) that regardless of timing of that tweet it will stay at the top of that search. The kicker here is that the Starbucks tweet will NOT be to the side like a Google ad, these tweets will be “in stream”, just like Ad.ly.

I do think, for the record, that there is plenty of space for third party in stream advertising regardless of Twitters entrance to the space.

Most people know that Google’s precious search algorithm is a secret, sacred, thing that they’ve worked very hard to protect. In fact their behavior around that algorithm has been similar to Golum’s behavior towards his “precious” ring. You know, the one that will ‘rule them all’. This algorithm and others allow Google to provide very focused advertising based on your search terms.

In computing, an algorithm is an effective method for solving a problem using a finite sequence of instructions.

However, the way I see it, their dominance in providing web advertising using the “precious”, all machine, set of instruction won’t last forever. There are human powered systems that can adjust quickly for variables, change over time, and become increasingly “sharp” as they learn. Simply, they can learn better than just a computer. A great example of this type of human powered system is a NYC based startup Hunch. Effectively, they’ve created a system where they can collect an infinite number of decision trees, all generated by humans, and then predict future decisions based on passed decision sequences.

So, what am I getting at? Well, as you know I’ve been working closely in the local advertising space through my work with Foursquare and I can’t stop thinking about how large of an opportunity this is. If a bar or restaurant can advertise directly to the folks driving by as they’re deciding where to eat, that’s better than any billboard, radio spot, newspaper clip, full page magazine add, event sponsorship, Adsense ad in my Gmail or Google search, and I could go on… It’s simply the best possible advert you could get, as an advertiser or a consumer, unless I’m missing something. Here’s an example, when companies spend money on other ‘focused’ internet advertising they pay for say 100 impressions. This means that 100 people saw that ad, and the common click-through rate is about 1/100, even on the ‘focused’ ads. Now, what if you were able to directly reach potential customers who frequent your ‘type’ of establishment, fall within a very specific demographic, and only if they’re walking distance from your location!!! Right now you’re saying, “WTF are you serious…”, and I am.

With the blowing up of location based services like Foursquare, Loopt, Brightkite and a few others, this sort of data is readily available. People are using these services to share their location, their purchase preferences, their unfiltered thoughts about almost everything they do and businesses can learn A LOT from that. Now you see why all these nerds (me) get excited about data; because you can change the world with it. With this data you can turn industries upside down, and the ability to reach consumers in this intimate way is one of those opportunities.

It’s all a matter of who can reach the masses, who can create a product intuitive enough for “Joe the Plumber” to use. Google’s Adsense technology is fairly simple, but still local businesses don’t use it. The potential for human powered mobile, local, advertising is in the words of Austin Powers, “dead sexy”. My mouth is literally watering. I can’t wait to be a part of this movement.

Update: This post is going to be syndicated, and I made some additions/updates for that reason. 1/5/10

http://www.techcrunch.com/2009/10/31/scamville-the-social-gaming-ecosystem-of-hell/

Then the next day on Nov 1, Tech Crunch followed up with quotes from two respected entrepreneurs who admittedly said they’d executed these types of ad strategies in the past and weren’t proud of it. One even said, “I’m surprised it took this many years to be reported by the “media”. These kind of scams have been going on for years…”

http://www.techcrunch.com/2009/11/01/scamville-hotornot-plentyoffish-facebook-myspace/

Then Dennis Yu the CEO of BlitzLocal wrote a very honest post about scamming Facebook and the 3 most common ways to do it: 1) Downloading a spyware tool bar, 2) Tricking users to give up their email using ‘you’ve won a “free” camera, just tell us you email address’, or 3) Getting a users phone number by using ‘thanks for taking that IQ test, give us your phone number so we know where to send it’, which charges a user $20/month.

http://www.techcrunch.com/2009/11/01/how-to-spam-facebook-like-a-pro-an-insiders-confession/

The next follow up was from Zynga’s VP of Biz Dev Andrew Trader who stated that about 1/3 of Zynga’s revenue comes from advertising. This is the same advertising that Arrington calls ‘scammy’.

http://www.techcrunch.com/2009/11/02/scamville-zynga-says-13-of-revenue-comes-from-lead-gen-and-other-offers/

Next Mark Pincus, who I wrote about last week, responded to Arrington’s claims with a very thoughtful post about the industry and openly admitting that yes, some players on these social media platforms are ‘scammy’ advertisers and they’re creating bad user experiences. He also raised a point I hadn’t thought of; there are many users who don’t have access to online payment methods (broke kids) who are still interested in making in game purchases. So they’re able to take survey’s and perform tasks to earn in-game-currency. Pincus says this about the worst offender:

In fact, the worst offender, tatto media, referenced in the techcrunch article, had already been taken down and permanently banned prior to the post.

There is no doubt that social gaming is entering the mainstream culture and there is a business to be created around fun….

As we evolve to a world where people connections are the basis for the largest consumer services, we will face more challenges. I’m confident that with so many smart people (and critics) we will overcome these.

http://markpincus.typepad.com/markpincus/2009/11/my-take-on-zynga-and-cpa-offers.html

Then yesterday Arrington respectfully responded to the Pincus post:

Hats off to Zynga. Flat out admitting that the problem exists and taking early steps to fix it is just something you don’t see from most companies.

http://www.techcrunch.com/2009/11/02/zynga-takes-steps-to-remove-scams-from-games/

I hope that I could catch you up to what’s going on here and make it easier for you to follow than reading every post (although you can of course). As I stated last week in my application economy post I really think that Pincus is a sharp entrepreneur. He understand that you can’t just F’ the user and still build a great business so I’m excited to see how he responds to this in the longer term. I wouldn’t doubt it at all if Pincus were to push Facebook to adopt the standards that Arrington et al. are calling for.

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There is no way in hell that I’ll believe this tweet wasn’t paid for. I’m not sure if it was paid directly from Babooshbaby.com, or some 3rd party advertising company, but it was paid for, I’m convinced.

There has been many a theory that the introduction of celebs on Twitter will mess it all up. The mainstream will bring the polluted stream of spam, inauthentic tweets, and Babooshbaby.com’s. Brooke Burke, (yes I follow her, for obvious reasons) is busy. She hosts events, she was down at Sundance last week, and she’s interesting so people will follow her. She’s a perfect opportunity for an advertisement. Even if I’m wrong here and this tweet is authentic, this will happen. Shaq will talk about shoes, Dave Mathews may talk about a guitar, Britney may talk about an abortion clinic…who knows.

I don’t know if this is bad though. It may become extremely useful to see what people are using or what products are good for what. As long as the celebs are actually tweeting it themselves and don’t just have teams of advertisers tweeting for them it may still add value. This will also rank peoples influence. You’ll be able to measure how many clickthroughs Britney got vs. how many Paris got. US Weekly is going to love these stats. Yet another situation where my tech world and my fiances pop world intersect.

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