Can You Make Money From A Pyramid Scheme

As it warned us last week, Twitter launched another scheme today to exploit its 200 million users for advertising purposes. In addition, it took some baby steps toward smoothing relations between itself and third-party developers.

Twitter Launches Another Scheme to Make Money

This latest revenue generator is called Promoted Accounts. It was announced last week by then-COO Dick Costolo at the IAB Mixx conference in New York City. Costolo was named CEO of the company today, as his predecessor, Evan Williams, announced he was stepping down to focus all his energies on product development.

Promoted Accounts allows advertisers to buy spots in the "Who To Follow" [sic?] column placed beside a user's tweet stream. The feature is designed to help users discover other users with similar interests. For advertisers, it would serve as a way to pump up their following.

To make the feature more palatable to members, the same algorithm that's used to suggest members a user should follow will also be used to determine if a promoted account should appear in the list. Carolyn Penner explained the process this way today at Twitter's company blog:

"Promoted Accounts are suggested based on a user's public list of whom they follow. When an advertiser promotes an account, Twitter's algorithm looks at that account's followers and determines other accounts that those users tend to follow. If a user follows some of those accounts, but not the advertiser's account, then Twitter may recommend the advertiser's Promoted Account to that user. For example, a lot of people who follow several gaming-related accounts also follow @xbox. If someone follows gaming-related accounts, but not @xbox, Twitter may recommend @xbox to that person."

Twitter accounts listed in the Who To Follow section can be hidden by clicking a box on the item. Theoretically, the same will be true for Promoted Accounts appearing in the area.

Promoted Accounts will also be appearing in the "Suggestions for You" area on the right side of a user's Twitter home page.

Users shouldn't worry about being overwhelmed by Promoted Accounts at this stage of the game. Penner explained that the program is in the testing phase and only a handful of companies will be initially participating in it.

In addition to the Promoted Accounts announcement, Twitter revealed that it has begun testing syndication of its Promoted Products program with some third-party developers, such as HootSuite. Under the scheme, the third-party partners will share in the revenues created by Promoted Tweets and Promoted Trends when they promote those products at their sites.

The move appears to be calculated to create some stability for developers of Twitter applications, who have seen early stage investment for their ideas dip 50 percent in the last year.