A few weeks ago I shared in a post here that I was working with a small group at Bridge Worldwide to develop a business model for Twitter. Quite a challenge, of course, but we came up with a very compelling idea that fits with our belief in meaningful marketing. At worst, it is giving us a nice strategy-plus-technology learning exercise. Since we started this R&D project a few weeks ago, I’ve been paying more attention to other developers’ attempts to wring cash out of the mighty growth of Twitter. Over the weekend I discovered a service called “Featured Users” and wanted to share my experience here. Overall, it looks compelling at first glance, but my results suggest this is not a big idea for marketers or investors.

Featured Users is an advertising network for Twitter application developers. The home pages of services such as Friend or Follow and Twibes.com agree to place a Featured Users ad unit prominently in their pages. The general idea and hope is that users of these free and valuable services feel compelled to repay them by visiting their sponsors. I decided to test the service because of the lost cost of trial ($10) and the chance to learn something for our work and this blog.

Setting up an account and program takes just minutes. For $10 on PayPal, I was able to buy 1,000 impressions. In the screenshot above you can see what that unit looks like. It is automatically generated by your current Twitter account, and thus includes your regular icon, Twitter address, account description, and the three most recent tweets. The results-tracking interface is basic but effective, showing the number of impressions, which sites they appeared on, and information on clicks (who clicked, when, and from which site).

My going-in assumption was that I would get something like a 2% click rate, or 20 clicks. This is far higher than the industry average for banners, which is about .1% and falling, and the rate on Facebook ads, which I have found to be as low as .02%. My rationale for believing in better results was that: (1) the ad placement is front and center; (2) Twitter users tend to be very interested in finding new people to follow (and getting followers in return); (3) this type of ad unit is novel, which means people haven’t learned to fully tune it out of their visual fields yet; and (4) I felt that there would be some “karma power” as people felt compelled to pay attention to sponsors for this free service. I believed that my Twitter account description, above, was fairly interesting. While my guess was higher than most ad units, I also went in believing that the results could be a lot worse. As a marketing investment, $10 for 20 new followers, or $.50 each, “felt” like a pretty good result.

The Results

My 1,000 ad impressions were exhausted within about 24 hours. This is the first lesson: It takes a while to burn through a very modest media buy. This suggests that the traffic on these affiliate app sites is fairly low. According to Featured Users, I received 6 total clicks on my ad. That’s a click rate of .60%, which falls below the service’s total average of .87%. That means the cost to me is $1.67 per click. That’s far less than my gut opinion.

Now, what I don’t know for sure is how many of these clicks resulted in followers. But if I look at my email account for messages about new followers, and compare them to the time on the clock that people clicked on my ad, then it looks as though I recorded zero new followers among my 6 clicks. Again, I might be wrong, but the evidence I have does not look good.

There are many reasons why results are so poor. First and foremost is the fact that people are just not interested in clicking ads—period. They are on the sites for a very direct purpose, and cruising off to a sponsor’s page is not on the agenda. Second, the ad units are completely untargeted. My marketing-related Twitter ad goes out to every single user, and I am guessing that click results would be better if I could, say, choose to show it only to people who have “marketing” or “social media” in their profiles. This would actually be simple for Featured Users to do, but it would mean far fewer opportunities to show my ad. This, in a nutshell, is the main reason we don’t see much hyper-targeting on the Web.

Now, there are probably a few things I could have done to improve my results slightly, of course. Featured Users suggested a few things such as “include the words ‘if you follow me, I’ll follow you’” and “original and odd bios tend to fare better.” Yes, yes—this might help a little bit, but these “tips” are fairly gimmicky, and a slight improvement in the click rate would not have helped my total results much.

My Take

Featured Users is difficult to justify as a marketing investment. I love the fact that I can see clearly the cost of each new click at $1.67, but I likely gained zero new followers for my money. And even if I picked up a few followers, it is difficult to put a dollar value on the type of person Featured Users sent my way. We all still have a difficult time estimating the benefit of a subscriber. For me, the goal is to attract people who may be interested in buying the services of my company (Fortune 500 marketing employees), or those who buy my book when it comes out in October. It is certainly possible that new followers will somehow drive revenue, but it’s not clear enough to keep investing confidently.

The best way to attract Twitter followers is to create great content and work with your social network to spread the word, and this is a microcosmic example of what’s going on in the marketing world today. I attract dozens of followers on Twitter, for free, when I share a thought-provoking comment that my existing followers choose to “re-tweet” to their own networks. I received 18 new followers yesterday alone because people discovered my blog (more content) or found me through other search and recommendation services. People don’t see, want, or trust traditional “telling and selling” ads, but they will heap attention on those that provide valuable content—in other words, Marketing with Meaning.

Finally, I believe Featured Users is not a big idea as a business model for Twitter, either. On paper it’s a great way to bring a service to marketers and a business model to many app developers. Like Google AdWords or Amazon affiliate programs, it attracts some money for sites that have zero today, but the traffic isn’t high enough and results are not strong enough to attract a critical mass of opportunity.

So we’ll keep our Skunk Works R&D project on a meaningful business model for Twitter going—and I’ll keep creating content here and on Twitter to earn your attention and word of mouth.