Twitter starts advertising with 'promoted tweets'

It has almost 50 million regular users and investors claim it could be worth $1 billion (£650.8 million), but, four years after its inception, Twitter has made almost no revenue.

Today it finally got round to having a crack at making a profit: from this afternoon, "tweeters" will for the first time face a small amount of advertising on the microblogging site.

The new "Promoted Tweets" service will see companies buying up keywords, so users seeking particular terms will find a sponsored, 140-character message at the top of their search results.

The idea is similar to Google's successful search-advertising system.

But unlike Google's scheme, Twitter's currently has only slim revenue-raising possibilities.

The start-up is limiting the ads to search results, when many users access the site purely to view a stream of posts from users they "follow", entirely avoiding the search facility.

Twitter is also limiting the number of advertising tweets to one per search.

The first firms to buy the 140-character tweets include Starbucks, Virgin America, Sony Pictures and Best Buy, the electronics retailer that is launching in the UK this month.

San Francisco-based Twitter had no sales until a tie-up with Google and Microsoft in December.

The two technology firms are thought to have paid Twitter $25 million to include its real-time search results in their search engines.

But analysts dismissed that as pocket money which would barely cover a year's running costs — the bill for Twitter's servers and staff is thought to exceed $25 million.

Twitter described today's deal as part of its "stubborn insistence on a slow and thoughtful approach to monetisation", although the company's co-founder Biz Stone said if users did not interact with Promoted Tweets by replying to them or "retweeting" them, they would "disappear".

In contrast to Twitter, its web rival Facebook is thought to rake in revenue of $1 billion a year from its demographically-targeted advertising.

Many of Twitter's other rivals, like Bebo, MySpace and Friends Reunited, have recently seen their stars fall.

AOL bought Bebo for $800 million two years ago, but last week announced a "strategic review" that looks set to lead to its closure.

Rupert Murdoch's News Corporation paid £364 million for MySpace, but highly-regarded technology analyst Henry Blodget recently claimed it was valued at "next to nothing".

ITV paid £175 million for Friends Reunited before selling it for £25 million last year.