Beware: Twitter is No Longer for Ads

Twitter’s New Ad Policy And The Dangers Of Tying Your Business To Another Ross | May 25th, 2010

Yesterday, Twitter’s COO Dick Costolo, in an effort to provide more clarity to Twitter’s developer ecosystem, discussed upcoming changes to Twitter’s terms of service and some of the principles that guided Twitter’s recent decisions. Here’s what Costolo wrote in his post:

As our primary concern is the long-term health and value of the network, we have and will continue to forgo near-term revenue opportunities in the service of carefully metering the impact of Promoted Tweets on the user experience. It is critical that the core experience of real-time introductions and information is protected for the user and with an eye toward long-term success for all advertisers, users and the Twitter ecosystem. For this reason, aside from Promoted Tweets, we will not allow any third party to inject paid tweets into a timeline on any service that leverages the Twitter API. We are updating our Terms of Service to articulate clearly what we mean by this statement, and we encourage you to read the updated API Terms of Service to be released shortly.

Shortly after Costolo’s post, Twitter’s API terms of service were indeed updated. Although debates will ensue about the specificity and clarity of those terms of service, I suspect that any ambiguity in the language is intentional – to give Twitter some wiggle room (for those who don’t know – I spent 13 years before crowdSPRING as an attorney representing companies on Intellectual Property issues).

Here’s what the amended terms say about in-stream ads on Twitter (Section IV, 1):

1. Twitter Ads. Twitter reserves the right to serve advertising via its APIs (“Twitter Ads“). If you decide to serve Twitter Ads once we start delivering them, we will share a portion of advertising revenue with you per our then-current terms and conditions.

There’s also this in the next section (Section IV, b and c):

(b) You may generally advertise around and on applications or sites that display Tweets, but you may not place any advertisements within the Twitter timeline on your Service other than Twitter Ads.

(c) Your advertisements cannot resemble or reasonably be confused by users as a Tweet.

That’s it. According to the amended terms, the only permissible in-stream ads are Twitter Ads (which are served by – and sold by – Twitter itself). Period.

Those of you who read my personal blog might recall that I wrote about this issue back in November 2009 – Social Media Insiders Fiddle While Twitter Burns. I am not a fan of in-stream advertising – here’s what I wrote then:

In-stream ads are already out there. Some people are already making large sums of purportedly easy money by promoting products and services they know little or nothing about. I’m not so worried about their credibility – their followers will decide whether or not they should continue listening.

I am worried about Twitter’s credibility. It’s on the line.

Twitter’s move yesterday to amend its API terms of service excluding third party in-stream ads not originating directly from Twitter is only partially satisfying, because Twitter intends to do what it seems to be prohibiting other companies from doing (which is its right).

But Twitter has made changes that have a far greater impact than merely on in-stream ads. There’s additional language that will impact sites that incorporate twitter content into pages (such as the Huffington Post and many other news sites). Here’s Section IV, 2 from Twitter’s amended terms of service:

2. Advertising Around Twitter Content

(a) We encourage you to create advertising opportunities around Twitter content that are compliant with these Rules. In cases where Twitter content is the basis (in whole or in part) of the advertising sale, we require you to compensate us (recoupable against any fees payable to Twitter for data licensing). For example, you may sell sponsorships or branding around gadgets or iframes that include Tweets and other customized visualizations of Twitter. Please contact us for questions and information at twitter_ads@twitter.com, or to notify us of an advertising opportunity.

(b) You may generally advertise around and on applications or sites that display Tweets, but you may not place any advertisements within the Twitter timeline on your Service other than Twitter Ads.

(c) Your advertisements cannot resemble or reasonably be confused by users as a Tweet.

(d) You may advertise in close proximity to the Twitter timeline (e.g., banner ads above or below timeline), but there must be a clear separation between Twitter content and your advertisements.

These changes will seriously impact ad networks like Sponsored Tweets and Ad.ly, who sell and insert advertisements directly into a user’s Twitter timeline.

For those interested in reading the complete (amended) API terms of service, you can find them here. Danny Sullivan also has a detailed post about this subject with some additional info from Twitter.

Twitter’s move shouldn’t surprise anyone. Last month, in reaction to announcements by Twitter (when Twitter acquired Tweetie) and Apple (concerning flash on the iPhone and iPad), I recorded a short video talking about the dangers of tying your business to another company. Twitter’s and Apple’s actions have significantly impacted each company’s developer network.

For those of you unaware of the Tweetie acquisition – Twitter decided in April to acquire the company that makes and sells Tweetie, a popular iPhone client. Prior to this acquisition, Twitter didn’t have its own iPhone application. In part, this was because a healthy and broad third party ecosystem of Twitter apps was developing around Twitter (most of the third party developers, like Twitter, had no revenue model). Twitter’s decision caused many in the Twitter developer ecosystem to wonder about their future and whether Twitter’s continued search for a revenue model would put more Twitter-dependent companies out of business.

Twitter’s move yesterday to amend its API terms of service suggests that Twitter’s developer ecosystem had good reasons to be worried. Twitter’s acquisition of Tweetie (and the reaction from Twitter’s developer community) and now the amended API terms of service that prohibit in-stream advertising other than the advertising sold by Twitter itself, highlights something that’s always been a risk: tying your business to that of another company. Here’s why:

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