The Future of Social Advertising: Can We Turn Brillo into Art?

Andy Warhol once said one of his goals was to be regarded as such as a brilliant conversationalist that people would pay him to attend parties (and he could list his party expenses as a tax-writeoff).

 Who  of us, whether celebrity or not, would not like to monetize our personality?

 Pay for Tweet companies (think Ad.ly, MyLikes.com, Sponsored Tweets) know this only too well. Actually, the problem is, they don't care if you have an engaging personality or tweet talent, they only require your willingness to serve as a passive vessel for an embedded link.

 And yet, these folks have not had it easy. With the ethos of the TwitterSphere valuing  transparency and authenticity,  the imposition of the FTC guidelines on advertiser  disclosure  as well as Twitter's own advertising guidelines, the Tweet-for-Pay market has had its challenges.

Even with these barriers, social advertising, specifically, ads appearing in the social stream, is inevitable. In February, Twitter released a video indicating promoted tweets would be hitting the public timeline of users by April. Facebook too is moving to provide a version of Twitter's promoted tweets into the Facebook news feed. We've not only seen Skype introduce ads recently but investor confidence behind social advertising was signalled with the March $5.6 Million investment in MyLikes.com. Providing the backdrop to all this, Twitter has indicated that sponsored tweets result in a 3-5% engagement ratio compared against today's 0.3% CTR of banner ads.  So it's no surprise that advertisers are chomping at the bit to get in your stream.

Interestingly, while the Tweet-for-Pay market was stalled in 2010, Klout, with its Klout Perks reward program, thrived well. Even as much as the exuberance for Klout is somewhat waning, CEOs of Tweet-for-Pay companies must surely look upon Klout's PR and market  position with some envy and frustration. Klout traffic is up nearly 50% over the year, whereas Sponsored Tweets is down 25% and Ad.ly down 71%. (Now some of these companies may argue that traffic isn't an indicator as they've repositioned for the exclusive celebrity tweet business. However, I will argue later, that that may be problematic long-term.)

Soure: Compete.com

On the one hand, Klout Perks and  Tweet-for-Pay are not that different: In the end, both business models reward tweeters, one with direct monetary reward, the other with sponsor gifts. On the other hand, there are some critical differences, ones which suggest some lessons on how future advertising might be incorporated into Twitter with less disruption.

Differences that Make a Critical Difference

1. Klout Perks are a Customer Loyalty Program

Klout Perks are achieved not by advocating specific brands, but rather by attaining a high Klout score, done only through online engagement.  Avoiding the FTC challenges, Klout Perks specify that rewards are received with no obligation to acknowledge the sponsoring reward company or its products. The company knows that many of the Klout Perk rewardees will in fact cross the line anyway and, in so doing, reward sponsors with their due.  This is powerful psychology: Leveraging the guilt of accepting the gift motivates the tweeter to mention the advertiser's name. Examples of these actions (and the envious/admiring reactions of others) are shown below:

2. Klout Perks Do Not Obnoxiously Intrude upon the Twitter Ecosystem

This one I realise is debatable. But overall, Klout Perks have a fairly high threshold to achieve a reward. Even while the average twitterer has a Klout score of 11, generally Klout Perks do not kick in for scores below 40  and for follower counts less than 2000-3000. [Post Update: Pls note these numbers are based on my qualitative observations, not on any known published figures from Klout or others.] As much as this high threshold eliminates a great deal of the Twitter hoi poloi, the relatively infrequent post of the Twitterati boasting of their Perks, keeps the Twittersphere abuzz and Wannabees reaching for the prize.  Happy Happy Closed Loopness.

3. Klout Perks are also in Twitter's Business Interest

As Klout rewards high Klout scorers on the basis of their participation levels in using Twitter (and yes, Facebook and LinkedIn) their interests dovetail with Twitter's desire to encourage participation on their platform. (Contributing to keeping the two companys' business goals in line, Klout has overlapping investors with Twitter.  For awhile, both companies even resided in the same building.)

4. Klout Perks Create a Game-like Atmosphere

As pointed out by Thomas Moradpour, Klout's social scoring system provides not only a game-like, addictive and competitive vehicle, but in viewing the Klout score components, users better understand the levers to increase their online influence. Yes, I've pointed out in the past this can be used to game the system, but it also can be used productively.

5. Klout Successfully Interloped the Celebrity Tweet Ecosystem

Living out Andy Warhol's vision of getting paid for personality, today many celebrities have lined up for the MyLikes, Ad.ly and Sponsored Tweet programs. However, most of these programs also use the Klout score as a core component in calculating the $1000 - $25,000 dollars paid for a celebrity tweet. Effectively, Klout has seized position as the online Q-score for celebrities, allowing it to fulfill the role of a "Nielsen rating for Social Media". This has allowed the entrance of a new generation of social media stars that also need a metric for calculating the value of their tweets. In the end, we remember that it was Klout, not Sponsored Tweets, that Britney Spears managers came to when they wanted to increase the star's social pay-grade.

When it comes to winning over the hearts and minds of Twitter (and after all, that is how a company connects the users to advertisers) Klout has taught the Pay-for-Tweet players that you have play into the Twitter infrastructure, making it a win for the service provider too.  As Twitter develops its own advertising model, it will become even more imperative for  Pay-for-Tweet companies to achieve synergy, not competition, with Twitter.

The Future of InStream Advertising: One Scenario

It seems there are two very different underlying currents driving future social advertising: Everyday Joes and Janes seeking to monetize their tweets and Celebrity Tweeters, a world that traditional advertisers are familiar with from the old school channel world of celebrity endorsements.

In pursuing both these groups, Tweet-for-Pay companies can learn much from observing Klout. Should they too diversify their offerings to provide a rewards program, balancing their existing FTC issues? Should they not be rewarding for pure engagement also, allowing a better fit to Twitter's own business model,justifying additional server infrastructure? What can they do better than Klout? Certainly, leader boards would urge-on ad-tweeters in a more game-like, addictive fashion. And, as pointed out by The Brand Builder , there are openings for Klout or a reward-diversified Tweet-for-Pay company to better match the gifts received to influential blogger's interests. (Hint: Olivier Blanchard wants Faconnable and chihuahua accessories, Beth Harte wants Hermes).

Whether it's Klout, Twitter or others meeting these needs, a serious upswing in Social Advertising is clearly in our future timelines. But as obnoxious as it is to do a Twitter Search on terms like "MyLikes" or "ad.ly" or "sponsoredtweet" and see the roiling carney show of artless broadcast advertising, I do not think the Tweet-for-Pay companies are ignoring the lessons of the Klout Perks program. Please don't - for the quality of the Twittersphere and your own survival depend on it.

How will the social ad market play out? The figure below is what i believe is the most likely play-out of Advertising's entrance into the Twitter feed, shown by the projected ratio of ad-related tweets to generic tweet volume. (The envelope reflects both the tweets of individuals seeking to monetize as well as celebrity tweet ads.)

Yes, initially, we can expect a steep uptick in the volume of sponsored tweets.  However, this initial hyped volume will not be sustainable for several reasons:

• A likely  initial rebellion by the "Let's be authentic" twitter population. (Twitter's March ad video forecasts this.)

• Increasing pressure on Twitter's server load, and related, 

• The  conflict of some Pay-for-Tweet companies with Twitter's own advertising model.

Even post an initial shake-out, I do see a secondary but damped peak as advertising companies take on a more sophisticated "Klout-like" model,  providing engaging leader boards as well as encouraging more artful, entertaining ad-tweets (including @MayorEmanuel style parody accounts and the equally hilarious Big Lebowski and Seinfeld tweet bots).  

In the spirit of turning Brillo into Art, there are efforts by celebrity tweet advertisers to keep the advertising in the style of the celebrity's own personality. For instance, Snoop Dogg's tweet for Toyota's minivan...

 Some of this Brillo-into-Art alchemy will work: But will Charlie Sheens' tweets sell more JagerMeister or bring on more Miami Bang Van customers? Maybe in those cases. But overall, in the second (green) phase of social advertising, I expect a decline in overall celebrity pay-for-tweet volume  associated with poor ROI results. Why? As I've posted before on the ill-begotten belief in large numbers ,  there is good data  that large follower counts do not necessarily lead to online opinion change or product sales.

After the Celebrity Tweet Bubble bursts, we can expect a damped third peak(blue phase) leading to a sustainable level of sponsored tweets.  This will be driven by  then-smarter advertisers and their agencies redirecting sponsored tweet dollars and gifts toward less-connected users but ones with identifiable networks of influence for particular product/interest groups. Because this is where the ROI lies.

The good new is there truly is a New New Market for non-celebrities  to monetize their tweets. The Twittersphere will tolerate this - a normalizing market correction - by users opting out, un- following those whose  tweet ads do not fit their line of interest.

In the end, instream advertising - especially where it is artful and engaging - will prevail.  

What's your vision of the future of instream social advertising? Do you think we can turn Brillo into Art? Or is Twitter doomed for ad clutter, where our Art  will turn into Brillo?

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Comments

[business directory]

That is very nice post .I am glad to see this post.Thank's for this nice article.

[Josh Davis]

Really enjoyed your post. Very thoughtful consideration of the future of ads on Twitter.

I was wondering if you can tell me where you came up with the 40 Klout score and 2000-3000 minimum qualification to get Klout perks. I have done considerable research on Klout and have never seen those numbers referenced before.

I know the post was done over a month ago, but I can't help but ask.

[Lisa Thorell]

Hi Josh,

Thanks for dropping by!

My reference to a Klout score of 40 and 2k-3k followers as a minimum for Klout Perks was based on my own qualitative observations of Klout Perk awardees. Alas- I have never found a precise statement by Klout on "minimum requirements" for Klout Perks. However - in violation of my statement - I just did a smidgin of research tonite and noted a Klout Perk for a wine promotion was being awarded to folks in the Klout score range of 46-53 who had followers in the 450-2500 range. It was clear in the tweeting that this perk was , in all 4 cases i looked at, associated with each Twitter account following a Wine expert twitter account that had a Klout score of 70+ and who had 7800 followers. What this seems to mean is that Klout is now allowing Klout Perk awardees in the range i defined to "sponsor" or re-assign Klout perks to some of their followers who have less followers (but who presumably may be being groomed as future influentials).

I apologize if my writing suggested that my description had greater validity --it appears we are watching a non-explicit and changing dynamic. It IS a very interesting question as to what the minimum criteria is for Klout Perks -- but seeing this wine promotion dynamic - i suspect it is industry specific. I believe they are exploring the dynamic themselves!