Why Magpie is Bad for Advertisers

There have been lots of posts on Magpie – a new service that periodically places ads in your tweets (or twitter stream) and shares the revenue with you. Essentially, if you sign up for Magpie you agree to a certain frequency of your tweets (from every second tweet to one in twenty) to be an ad. Essentially, I am monetizing my twitter followers. I would guess that the creators figured that if Twitter isn’t going to monetize the eyeballs then someone should…..

My concern is more about the ad revenue model and its sustainability vs. the impacts on the twitter community which has already been covered by brilliant tweeters including Jeremiah Owyang (who ran a test), Geekmommy, Pistachio and Rick at Read Write Web.

Issues for Advertisers

• Measures – You don’t know how many people are actually looking at each tweet. Every time I log on to twitter my entire screen is refreshed but I typically only read a small number of those.
• Quality – Many people are followed by corporations, spammers and other inactive entities. The payout is related to the # of followers which may have very little relation to the active audience.
• Pay for Performance – Magpie says that the cost of an ad is based on the # of followers and “hotness” of a topic. Given the issue with quality of followers, actual views, etc it seems that a PPC model would be more appropriate for ensuring performance.

Other Problems with the Model

• Disclosure – The ads are tagged with #magpie, which only identifies it as an ad to those who already know what magpie is. There needs to be better disclosure that this is in fact an ad.
• The Targeting is Backwards – Magpie targets based on the sender and not the receiver. The ad context is determined by the person tweeting and not their followers, which reduces the relevance versus even typical banner advertising. If I sign up for magpie, the ads will be placed in my twitterstream and all of my followers will see them. I have a very diverse range of followers from marketers, to photographers to Cincinnati people, to ???? and it is unlikely that all of these people would be interested in the same ad. By targeting based on the sender and not the receiver the context is likely worse than other forms of advertising.
• The Old Model – Magpie follows the old model of interruption advertising, which essentially involves accosting people and interrupting them from what they are actually doing to assert your ad at them. Twitter is actually a great tool for meaningfully engaging with consumers; using magpie when there are robust engagement options seems silly.  Twitter is a social tool that brands can play in.  Brands: BE SOCIAL and talk to people vs. advertise at them.
• It’s Cheaper to be Real – Anyone (including advertisers and companies) can engage on twitter. Rather than insert ads, why not run a tweetscan on your keywords and engage in conversations with those who are tweeting about your subject. If they respond to you @companyname or talk about your product then you are getting a genuine endorsement or mention, which is more valuable than an ad. Here is the math:
  • You pay an entry level social media outreach person 35k/year, which works out to about $17/hour.
  • They send out 30 tweets/hour, or 1 every 2 minutes since the goal here is to be relevant which takes more time.
  • You are paying $0.55/tweet.
  • 1 out of every 2 people you @ tweet at responds.
  • You are paying $1.10/response

OK, this isn’t exactly realistic since it is unlikely that you would have an entire person at 35k/year exclusively twittering, but you get the point.

Conclusion?

Magpie doesn’t appear to offer any real value to advertisers, and seems less effective than other forms of advertising. Companies are dying to figure out ways to get involved in social media, but Magpie is not the solution. Engage in genuine, relevant conversations and save yourself the ad $$ – it will probably cost about the same but the value you are deriving is much greater. Take those ad dollars and invest in human capital.

On a side note I would find it incredibly annoying to have advertisements twittered at me.

What do you think?