Twitter Lists: Paving the Way for Ads?

There’s a lot of excitement around the release of Twitter’s Lists feature. Understandably. As I’ve blogged about, it solves critical usability problems for new users, especially. And it may be key to reigniting Twitter’s growth. Aside from making the stream easier to read, Lists can be used to create a target audience of followers and in a lot of creative ways by business users and bloggers.

Those are all reasons for Twitter to be excited and promote Lists–but there’s another one, as well. Lists provide an important way for Twitter to target ads.

The company has made no secret of its plan to include ads in the stream. There are two general types of ads:

• impression-based where advertisers pay for the number of “eyeballs” (users) who see the ad
• click or conversion-based, where advertiser pay per click on the ad or for a specific action the user takes on the advertiser’s site, having gotten there through the ad

In both cases, advertisers are concerned with reaching their target customers. They will pay more for impressions shown to customers who are in their target demographic. They expect a great click-through rate or conversion rate from users who fit the right characteristics for their product. 

ESPN pays more to advertise to males of a certain age than females. They pay more to advertise on sports blogs and sports news sites than on other sites.

See where this is headed? You create a Twitter List of Seahawks football players. A thousand people subscribe to it. Twitter serves Seahawks ads in the stream for that List, targeting ads to the List. People who have subscribed to the Seahawks List are guaranteed to be Seahawks fans, so Twitter can charge a higher rate for ads served in that List. (Actually, most likely advertisers will bid in an auction to place ads on Lists that match the keywords “Seahawks football”, and will thereby drive the price up nicely for Twitter. That’s how most advertising networks work.)

Moreover, Twitter will know exactly how many subscribers there are to each list. It’s part of the API. So, they can tell advertisers how many eyeballs they are getting for impression-based ads.

Other information Twitter will be tracking could be used to later advantage, as part of their premium business accounts–something else they’ve said they plan to offer as way to earn revenue. For example, other bloggers have talked about the popularity contest that will be created by publicizing how many Lists people are in. That’s also a way to identify influential people. Targeting influential bloggers and, soon, influential Tweeterers is an increasingly important tactic for marketers and PR people. Add the List count as a way to identify and target influential users.

Determining the various Lists that people have subscribed to helps paint an overall picture of that person and their interests, something that is useful for more sophisticated behavoiral ad targeting. There’s a lot to be sorted out in that area, as Congress investigates and legislates and the courts rule, but Twitter, like Google, will be pressed to use whatever information it’s legally able to for ad targeting purposes.

It kind of puts a taint on that nice Lists feature, doesn’t it? I don’t think it’s all bad, though. Lists will offer a lot of advantages. And a company’s gotta make money somehow. If we want Twitter to be our playground, we’ll have to pay a tax somehow. Ads are easy enough to ignore. And if you’re gong to serve me ads, I’d rather they were relevant and possibly of use to me. What about you? What do you think of Lists and ads?