In a move that’s in stark contrast to most web strategies, Twitter COO Dick Costolo told Adweek that the site would not be following the traditional revenue-generating path where banner ads clutter web pages.  Instead, Twitter plans to skip such short-term monetization tactics that detract from the user experience on the site and focus on long-term, sustainable revenue generating strategies that enhance the user experience rather than intruding on it.

The first step in this direction was the launch of Twitter’s Promoted Trends product which is showing increased conversations for promoted trends topics of 300-500%.  Twitter’s Promoted Tweets product is seeing engagement rates (including clicks, @replies, and retweets) as high as 5% and an 80% renewal rate.  You can learn more about Promoted Tweets in the video below.

The trick for Twitter will be to grow the Promoted Trends and Promoted Tweets products and introduce additional monetization products through its growing advertising sales team that don’t end up monopolizing the site.  Just as Costolo notes that display ads can take over a site, so can promoted trends, sponsored tweets, and similar activities.

Twitter’s need to generate revenues through a sustainable business model isn’t a new topic across the business and online worlds.  However, Twitter is finally launching efforts to tackle the issue.  Will they work and at what point will monetization negatively affect the use experience, the brand, and the site?  We’ll have to wait and see, but it’s both interesting and educational to watch it play out.

What do you think about Twitter’s monetization methods?  Leave a comment and share your thoughts about Promoted Trends and Promoted Tweets on Twitter.