Third in our series on social media optimization for the ecommerce industry; this blog focuses on advertising options on Twitter.

As of January 2010 Twitter had 75 million users. The users are expected to peak at roughly 160 million according to businessinsider. Averaging around 40 million tweets a day and growing at a rate of around 17% a month.

Highlighting the mobility of the platform about 80% of Twitter activity takes place on mobile devices.

It is important to note that according to The Guardian’s Digital Content Blog, Twitter already reached its full market share and peaked in mid 2009. A recent study by Barracuda Networks Inc. claims that only 21% of twitter users are actively using the platform.

Twitter offers advertisers the ability to promote their products and services through building followers and in the near future through Promoted tweets.

Promoted tweets will have one ad per page. The ads are based on keywords in Twitter search. Promoted tweets will appear at the top of the search results page, with small text indicating they were sponsored. Companies could utilize this form of advertising in order to combat negative tweets (by placing a positive tweet at the top of the page). A Promoted Tweet isn’t guaranteed to stay afloat for a long time — if the tweet isn’t tracking well in terms of replies, clicks, and a number of other metrics Twitter is calling “resonance” and it will be pulled, and the advertiser won’t pay for it. Advertisers will be paying on a CPM basis initially, with plans to adjust the model once Twitter can better gauge how people are engaging with Promoted Tweets. Initial ad partners testing promoted tweets include Best Buy, Virgin America, Starbucks and Bravo.

Twitter will eventually allow third party Twitter clients to integrate Promoted Tweets, with the app developer receiving a cut of the revenue. Twitter also plans to eventually put ads into your Twitter stream even if a user did not perform a search and does not follow the advertiser. (For example, if someone has been writing posts about the Fourth of July, they could see a promoted post from Virgin America on holiday fare discounts).

A Private competitor of Promoted Tweets is Tweetup. This company differentiates itself from Promoted Tweets by ordering tweets based on relevance and not by chronology. Therefore the results feel more organic by not being on top of page. This is a self-service model, not just for the big brands.

Twitter is simultaneously expanding its reach into search engines licensing its stream of Tweets to Microsoft, Google and Yahoo —which are all using the data to add real-time results from Twitter to their search engines. The Microsoft and Google deals alone are believed to be worth as much as $25 million.

According to advertisers who are interested in gathering followers to their Twitter accounts should aim at between 100 to 500 followers. Accounts of this size generated 146% more monthly leads than those with 21 to 100 followers. Also growing a large following of thousands of followers does not appear to generate any additional leads lift Twitter followers.

Although Promoted Tweets has not yet been activated to the general public it is still possible to utilize Tweetup to promote products and services. And contrary to popular belief a huge twitter following does not necessarily generate more monthly leads. Your Twitter account’s ROI sweet spot is between 100 to 500 followers.

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