When McDonald's started offering its breakfast menu all day, it launched its promotional campaign with a commercial featuring comments from Twitter (NYSE:TWTR) and Facebook. Samsung has culled social media for comments to promote its smartphones and tablets in the past. And dozens of other companies are using real social interactions to promote their products and services every day online.
Twitter's newest ad product aims to help advertisers collect and display organic product endorsements from real users. The new product is based on a "brand enthusiast gallery," which collects brand-related tweets for advertisers to pick through. The actual ad features a standard promoted tweet with a carousel of related tweets from users.
This new product represents a shift in how Twitter is monetizing its content.
Selling its content ... which is really your content
The new ad format that Twitter is reportedly testing is essentially selling a package of its content to businesses. Whether Twitter owns the rights to that content rests on murky legal grounds, so it's covering its bases by asking for permission from users through a Direct Message.
This makes sure everything is above board, though users still won't receive any compensation. The content users produce is clearly worth something, otherwise businesses and Twitter wouldn't be asking for it. But unless users band together to say no, businesses will be able to get some valuable content for free while Twitter profits.
Still, it's unlikely people will stop certain behaviors because their tweets are being used in advertisements. If anything, it could encourage publicity seekers to post promotional tweets with the hope of getting featured -- a best case scenario for Twitter.
How it fits with other Twitter products
The new ad product works well with Niche -- a company acquired by Twitter last year. Niche specializes in connecting social media personalities with strong followings to brands looking to take advantage of an engaged audience. It's an online talent agency, so to speak. Combined with with organic tweets from the new ad product, Twitter can now offer a range of brand endorsement options.
Additionally, Twitter's recently launched Moments feature is the perfect platform to display organic promotions from users. For example, Moments and McDonald's all day breakfast launched on the same day. Buzzfeed created a Moment collecting reactions from Twitter users as well as Buzzfeed generated content for the fast food restaurant. Promoted Moments are still expensive, but prices are expected to come down over time, opening the door for more brands.
Social media advertising was the fastest growing digital ad segment in 2015, according to Magna Global. It grew even faster than digital video advertising -- although video certainly plays a part in social media. But social media advertising is heavily reliant on interactions between businesses and users. Whether that's directly or through an influencer, there's not much social about social media advertising.
Twitter is working to change that. The new ad product could eventually be tweaked to surface different Tweets for each individual user, displaying tweets from users closely related to the viewer -- e.g. a follower, a friend of a friend, or someone that lives nearby. These social endorsements ought to prove more effective than an impersonal promotion.
Instagram, meanwhile, just rolled out direct advertising to all businesses starting last Summer. But it contains even more content that brands would love to harness. Some companies have millions of photos tagged with their brands on Instagram, which currently acts as free promotion for their products. But brands don't have very many ways of using that content. Ironically, Twitter (through Niche) is better able to capitalize on Instagram's content than Instagram itself.
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Adam Levy has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.