Twitter Will Make Money With Sponsored Direct Messages*

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Update: Below, Twitter CEO Evan Williams comments to clarify Todd’s position on Twitter’s board. He writes: “To be clear: Todd is a Twitter investor and a very smart and helpful guy. However, he is not actually on Twitter’s board and, in this article, he’s brainstorming on his own. These are not in the least bit concrete plans of the company.”

Earlier: Twitter users should get ready for messages from companies bearing coupons and discounts, says a Twitter investor.

Todd Chaffee, an Institutional Venture Partners VC and Twitter board member, told the New York Times Twitter will make money allowing companies to send users coupons and e-commerce links embedded in messages sent as automatic replies to questions like “What treadmill should I buy?”  

He said:

“Commerce-based search businesses monetise extremely well, and if someone says, ‘What treadmill should I buy?’ you as the treadmill company want to be there. As people use Twitter to get trusted recommendations from friends and followers on what to buy, e-commerce navigation and payments will certainly play a role in Twitter monetization.”

We think Twitter should proceed very carefully with this idea. If Twitter sets it so users have to opt-in to receive commercial messages from companies, then OK. Otherwise, there are already too many spam accounts on Twitter that do nothing but send an “@ reply” to any user that tweets particular phrases or words. (Try tweeting “Web hosting,” for example.) Any more spam like that, and users might quit in droves.

Chaffee and Twitter are correct that it makes sense to pair user-queries about certain products with ads from the companies that make those products, but we think a smarter way to do that would be through putting those companies’ ads next to relevant search results.

With .001% market share, Twitter Search isn’t popular enough to make selling search ads a real business yet, but we think Twitter could get there, especially if it signs a long-rumoured deal with Google.

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