I-Tech

I’m still not sure if the Twitter stream is the right place to be for advertising, but with the way the company set out to make it easy for developers to build upon their platform with open APIs, it’s no wonder so many ad networks have sprung up since it got started. Its massive growth and the fact that the San Francisco startup is a media and celebrity darling probably helped in that regard, too.

One of the companies that is dabbling with advertising on Twitter – even if Biz & co seem to be reluctant to do some serious testing of their own – is Ad.ly, an LA-based startup that launched about a month ago.

In essence, Ad.ly aims to link up high-profile advertisers with celebrities on Twitter and distribute links to marketing campaigns through the celebs’ tweet streams with full disclosure.

The model is pretty straightforward: the celebrity (or publisher) gets a lot of cash in return for a couple of messages that are under 140 characters, and Ad.ly takes its cut.

As my colleague Leena Rao wrote upon Ad.ly’s launch:

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.

That’s a lot of money for tweets, so time will tell if it’s a sustainable model, if celebrities keep signing up and using the service and if Ad.ly will be able to pay their promised dues. But some investors are bullish on the potential, at least.

Yesterday, GRP Partners’ Mark Suster wrote an interesting blog post on the topic of VC seed funding. In the post, Suster reveals that GRP Partners, where he is a General Partner, has just closed a $500,000 seed round for Ad.ly and that he’d be interested in leading or joining follow-up VC financing rounds if the startup keeps performing well.

A couple of weeks ago, Ad.ly even hired a West Hollywood PR and marketing firm called Entertainment Fusion Group to be its ‘Agency of Record’; EFG will help the fledgling company with public relations and talent procurement. Since it’s deeply embedded in the entertainment industry, the firm should help Ad.ly get some exposure within the circle of movie stars and other celebrities.

So what gives? Has Ad.ly, with its focus on high-profile advertising partners and celeb Twitter users with a large number of followers, cracked the nut of Twitter advertising? Impossible to say without seeing some numbers, but it appears to be striking a chord or two.

Not that Ad.ly is the only one trying to capitalize on Twitter’s growth and celebrities’ massive audience. SponsoredTweets (from IZEA) does much of the same, and then there’s ExecTweets, a cooperation between Microsoft and Federated Media. Others, like Be-A-Magpie and Twittad, have their sights set on the long tail of Twitter.

Whether you think of it as stream pollution or an innovation social media monetization, Twitter advertising is here to stay, for better or worse. And you can rest assured many of these ad networks are going to run a profitable business way before Twitter does. The flip side of that coin is of course the fact that all of rely on the Twitter platform, so if they prosper or perish is partly Twitter’s call.

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