Will advertisers really pay for Twitter?

Twitter co-founder has this week unveiled the details of how the micro-blogging site will make money from advertising on Twitter – Promoted Tweets.

It’s no secret that Twitter ranks as one of the most popular sites on the internet. Over the years since its launch, the site claims it has actually resisted introducing a traditional web advertising model because it first wanted to “optimize for value before profit”.

The truth, more like, is probably something to do with the fact the site couldn’t figure out the ‘how’ and still maintain its integrity.

But, the open exchange of information creates opportunities for individuals, organizations, and businesses alike.

Twitter, on its blog, said that it has now recognized value in this exchange and planned to amplify it in a meaningful and relevant manner.

“Stubborn insistence on a slow and thoughtful approach to monetization—one which puts users first, amplifies existing value, and generates profit has frustrated some Twitter watchers. “

Hence the new advertising model – Promoted Tweets.

The social networking site describes the model as “non-traditional, easy, and it makes a ton of sense for Twitter”. But does it make sense for advertisers?

So what’s the logistics?

Promoted Tweets are ordinary Tweets that businesses and organizations want to highlight to a wider group of users.

Users will start to see Tweets promoted the sites partner advertisers (which so far include Virgin and Starbucks) called out at the top of some Twitter.com search results pages. Twitter believes that the Promoted Tweets will be useful to its users and will  attempt to measure whether the Tweets resonate.

Promoted Tweets will be clearly labeled as “promoted” when an advertiser is paying, but in every other respect they will first exist as regular Tweets and will be organically sent to the timelines of those who follow a brand. Promoted Tweets will also retain all the functionality of a regular Tweet including replying, Retweeting, and favoriting. Only one Promoted Tweet will be displayed on the search results page (mmm, a lucrative ad deal and hence where the money comes from).

There is one big difference between a Promoted Tweet and a regular Tweet. Promoted Tweets must meet a higher bar—they must resonate with users. That means if users don’t interact with a Promoted Tweet to allow Twitter to know that the Promoted Tweet is resonating with them, such as replying to it, favoriting it, or Retweeting it, the Promoted Tweet will disappear. Does that mean the advertiser will get some of its money back? Or a discount next time? Or will advertisers just be happy with the free lesson in what works for online TV?

So how much money will Twitter make from this new business model?

Twitter co-founder Biz Stone hyping this year as the site’s revenue year, so he must be aiming to make a fair amount from ads. But I suppose the bigger question is, how much will advertisers pay to place ads on Twitter? How much would you pay?

Josh Bernoff, co-author of “Groundswell: Winning in a World Transformed by Social Technologies,” predicts that the new model is a $100 million revenue stream, so I’m guessing those ads won’t come cheap. They better work in that case.