HOW TO MAKE MONEY ON TWITTER? AD.LY

As Twitter continues to mull over how to make money, startups are looking to capitalize on the advertising potential of the microblogging platform. Media network Glam Media is going to be launching a Twitter ad network. And today, Adly, an Los Angeles-based startup, is launching a Twitter-based advertising network to connect high-end brand advertisers with celebrity and high-profile Twitter users. The idea behind the startup is simple: advertisers can pick which celeb they want to Tweet about their product and once the celeb approves the Tweet, he or she will be paid handsomely by the advertisers. Basically, Ad.ly is the middleman between advertisers and the Twitterati. In fact, founder and CEO Sean Rad says that he wants Ad.ly to be the Federated Media for Twitter.

Ad.ly’s platform is self-serve for both the Twitterati and the advertisers. So for example, an advertiser for Dell could choose which celeb or power-user to pitch their ad too and then submit a bid to a particular user. The celeb (or publisher) then approves or denies the request. Once the publisher approves the Tweet, the message is sent out via their account by Ad.ly. Each campaign requires the celeb to send out four Tweets over the course of a week. Here’s a sample Tweet that a celeb would send out. It’s important to note that each Tweet identifies Ad.ly and links to an online interactive campaign for a brand:

So how do advertisers know how well their campaign is doing on Twitter? Ad.ly features a customized dashboard that tracks click-through rates, retweets, and even the geographic location of users who retweet an ad. The startup is also in the process of launching a “machine learning client” product that would identify the makeup of a celeb’s user base and then match advertisers based on the target audience of a brand’s ad pitch. For example, the new technology will determine the breakdown of a celeb’s follower base by gender.

Each publisher sets the price of a Tweet campaign but Ad.ly will give the publisher a pricing suggestion based on variety of metrics. Ad.ly’s proprietary algorithm evaluates follower counts, authority, quality of Tweets and will help determine the Twitter’s value. And when I say that celebs get paid “handsomely,” I mean it. If a celeb has above a million followers, each Tweet gets in the five figures, with multiple Tweets about a product netting the celeb a six-figure reward (yes, for four Tweets!). Ad.ly takes a cut of what the celeb makes, but Rad wouldn’t reveal what the percentage is.

This is an interesting idea and a potentially lucrative money maker if these numbers are correct but there are a few concerns I have. First, will a celeb’s Twitter “authority” be negatively impacted by the appearance of ads within his or her stream? The second issue I have is the whole idea that a celeb will be monetizing off of other people clicking in their Tweets. I’m not sure how followers will react to this, considering many of these celebs are raking in the money as it is.

But Rad says that the ads won’t distort the quality of a celeb’s stream because the Tweets are spread out and sent every two days, and the ad campaigns that are promoted via Ad.ly’s platform are for high-end brands such as Dell, Maserati, and Hilton. He adds that ad-sponsored Tweets are clearly marked by Ad.ly so people can ignore those Tweets if they’d like. As for the monetization issue, Rad says that celebs can opt to donate any proceeds they receive from the campaign to a charity of their choice.

For the launch, Rad has accumulated an impressive list of high-profile celebs who are willing to participate in the network. Celebs include Kim Kardashian, Brooke Burke, Nicole Richie, Brody Jenner, Dr. Drew and Samantha Ronson.

Ad.ly has recently raised a Series A round of funding from GRP Partners but Rad declined to reveal the amount of funding. Ad.ly faces competition from fellow Twitter ad networks Magpie and Twittad.