American Express and Twitter just announced a new promotion. If you link your Amex card with Twitter, and then Tweet out a sponsored hashtag, then you will receive a discount at a selected merchant. For example, if you tweet out #AmexHM, you receive a $10 back on a purchase of $50 or more at H&M. This comes close on the tail of American Express' recent deal with Foursquare, which allows Foursquare users to receive a discount on their bills at selected restaurants and stores when they connect their cards and check in on Foursquare.
Everyone expected that Twitter would eventually figure out how to make money from its 350+ million of users and 200 millions of tweets per day (those numbers were released in June 2011, and are almost a year out of date - I'm guessing that the real numbers are around twice that). I had always expected them to monetize the twitter stream by inserting ads into the stream, or by running banner ads on Twitter. Twitter does now support "promoted tweets," but this is clearly just the tip of the iceberg. People have gotten really good at filtering out advertising (I didn't even notice that there were ads on Google until it was pointed out to me), so promoted tweets are obviously just that - ads. What we are now seeing is an entirely new kind of advertising, and this one is much more subtle. Rather than having the brands advertise directly to their customers, Twitter and Foursquare are getting you and me to fill that role instead.
The hashtag was invented around 2007, although Twitter didn't officially support it until somewhat later. It essentially allows Twitter users to mark their tweets with relevant metadata, such as #SxSW or #500Startups. Twitter now lists the trending hashtags, and if you look at those tags, you can actually get an idea about what is going on with the Internet and in the world in general (this is clearly a distorted view of the world, but let's leave that alone for the time being). Regardless, hashtags have become an accepted part of our culture, enabling us to sum up important concepts and memes in a single word (#lolcatz).
So now that the hashtag has crept into our culture, brands have figured out how to co-opt and even corrupt this medium. As you read through your Twitter stream, some of the content is free and well intentioned, and some of it is paid. The problem is that it isn't immediately obvious which is which, at least upon a quick read. As we quickly scan through our Twitter feeds, we pick out a few links for clickthroughs, and quickly discard the rest. But this is where the insidious part comes in - even if we don't consciously parse the ads (or immediately discard them), our brains are still receiving them. When we see "#AmexHM" in our feed, potentially accompanied by a message about how awesome American Express is, we are subtly influenced to apply for our own American Express card, or even to use it more (disclosure: I happen to have an American Express card). In the case of Foursquare, we see that our friends have checked in at a sponsored venue, and may be more influenced to go there ourselves (and when we go there, we will use our American Express card to get the discount).
I personally am somewhat offended by the whole thing. I have built up a (small) Twitter following through posting quality content to my Twitter feed, and now corporations expect me to spam my friends in order to get discounts (which also requires me to spend money on their brands). This makes sense from a business perspective (they are literally paying us to do their marketing for them), but it somehow feels distasteful. And as I browse through a Twitter search for some of the sponsored hashtags, it appears to be working. Is it working well enough to make lots of money for everyone involved? I'm not sure, but I think that this is the start (or maybe just the mainstream emergence) of a new type of marketing.
Are we headed towards a digital dystopia, where brands are able to corrupt every aspect of our lives? I think it's too early to tell, but Twitter has definitely stumbled onto something big. By teaming up with brands to add promotion to the "non-ad" parts of their platform, Twitter may be able to infuse marketing into increasingly greater numbers of tweets. If they can manage to extend this concept without overusing it or making it stale, they may be able to build all their potential into a real business. The next few years will be interesting as these businesses mature, and may transform the face of Internet advertising.