Twitter Unveils Google Ad Model, Despite Hype

According to people briefed by Twitter, AllThingsD reports that the ads will only show up in Twitter search results. So, if you don't conduct a search, you won't see any ads. No ads will appear in a user's Twitter stream. And, ads will be presented in chunks of only up to 140 characters, consistent with the site's user interaction format. The ads will be context-sensitive, so you will only be fed offers that are relevant to the search terms you use.

But Twitter is pushing ads to third-party services that hook into its API, which will help the company capture some value from the 70% of its user base that doesn't interact with Twitter.com. Unlike Google, which uses a self-service model, Twitter will start with ad agencies and buyers, though it hopes to ape the Google approach sometime in the future.

With all the requisite caveats, AllThingsD expects the ads to be launched in the first half of this year. And, there are plenty of details to be worked out, including pricing (per click or per impression?), how advertisers will buy space and whether Twitter's search functionality will be improved. To hedge its bets, Twitter isn't positioning its ad model as its core revenue stream and is merely calling it a "test."

What's particularly disconcerting about this approach is the money that Twitter is leaving on the table. Search is not where the action occurs on Twitter, though clicking a hash-tag does execute a search, which provides additional opportunity to present ads to users.

Nonetheless, it seems like even slapping a few text ads on the home page in addition to search-based advertising wouldn't be a bad idea. Or, Twitter could follow Facebook or MySpace (NWS) and get a bit more aggressive in creating ad avails. Hopefully, this is merely a first step, with more robust approaches already in the works.

For now, we are left to wonder -- still -- how Twitter will make money. Search-based advertising just doesn't seem to be the answer.