For the past few months, my colleagues and I have been giving speeches regarding the legal and practical challenges inherent in social media. One of those “practical” challenges is developing a strategy to monetize social media initiatives. While this is of importance to brands using social media services, it is certainly important to the services themselves. To highlight this point, I usually mention that Twitter, which handles approximately 50 million Tweets a day, doesn’t make money off its service, yet people like Kim Kardashian may be getting paid up to $10,000 to Tweet (which any reader of this blog will note raises concerns under the Federal Trade Commission’s Endorsement and Testimonial Guides – for analysis of those concerns, see here and here).

Now I may have to change the presentation because Twitter has announced a plan to start advertising through the use of “Promoted Tweets.” Promoted Tweets are Tweets that businesses and organizations want to highlight to a wider group of users, according to Twitter’s company blog. In fact, Twitter has already signed up companies like Best Buy, Bravo, Red Bull, Sony Pictures, Starbucks, and Virgin America to participate in Promoted Tweets.

As the program is currently described, Promoted Tweets will be rolled out in two phases. The first phase, which should launch today, will insert Promoted Tweets into Twitter search results, and will be seen by between 2 and 10 percent of Twitter users. The second phase will extend advertising practices to user-feeds both on and to third-party clients who access the service, including Tweetie (which was acquired by Twitter just a few days ago).

As is to be expected, the Promoted Tweets are themselves Tweets, meaning that Twitter users can “re-Tweet” the ad to share it with their followers, can make the ad a favorite, or can comment on/reply to it. Interestingly, though, Twitter has factored this ability into the metrics for Promoted Tweets, which may ultimately be used to determine how much an advertiser pays for the keyword. The key metric, at this stage, is something Twitter is calling “resonance,” which measures how Twitter users interact with a particular Promoted Tweet. If users don’t interact with a Promoted Tweet (replying to it, favoriting it, or re-Tweeting it), the Promoted Tweet will disappear. This is not the case for regular Tweets.

What does this mean for advertisers? Well, let’s say you’re a movie studio. You know that people use Twitter to search for reviews, thoughts, and criticisms of currently released and soon-to-be-released movies, often to help them decide what movie they should see tonight. You want them to see your movie, and you happen to have surprise “midnight screenings” scheduled in locations across the country. While you could use a regular Tweet to advertise those locations and generate both interest in and buzz about your movie, that Tweet would only be read by your followers. If you used Promoted Tweets, however, you could reach Twitter users who are not (currently) your followers, but who are interested in movies and are likely to engage whole groups of other similarly situated people. In short, Promoted Tweets can offer you a whole new means of reaching consumers.

Why This Matters: For users, this matters because you will soon see advertising on Twitter spaces that wasn’t there before. For advertisers, this matters because you will now be able to buy keywords to get your Tweets higher placement in search results (and ultimately, placement in user feeds, if Twitter follows its plan). This can be both good and bad – good for increasing exposure to your Tweets (as described above), but bad because your competitors will be able to do the same. Moreover, this raises interesting trademark law questions, especially regarding sales of trademarked words and phrases as Twitter keywords. Even now this is an area of law that is still evolving in the world of search engines like Google, so rest assured that the same issues will apply here.