Reporting from San Francisco — L.A. indie rock band Hypnogaja doesn't have a large marketing budget or the backing of a major label, but it does have 1.2 million Twitter followers. And that was recently worth $3,500.
The band made the money by sending out two, 140-character tweets plugging other musical acts -- Daughtry and Boys Like Girls -- to its huge Twitter entourage.
"It's nothing that we haven't done for bands that we like," said keyboardist Mark Nubar Donikian, whose two tweets helped pay for the band's trip to a music festival in Texas. "We just haven't gotten paid for those."
Donikian is one of a growing number of entrepreneurs cashing in on their Twitter popularity. They got the cash from Beverly Hills Ad.ly, a business that solicits Twitter promotions. Ad.ly is among several such brokerage firms that have sprung up in recent months to match advertisers with Twitter users. Others include Sponsored Tweets of Orlando, Fla., and MyLikes of San Francisco.
These companies represent the latest attempts by the nascent industry to figure out how to make money from social networks such as Twitter.
For its part, the San Francisco Internet company launched its own advertising strategy this week. "Promoted tweets" from such advertisers as Best Buy, Red Bull, Sony Pictures and Virgin America have begun to appear atop its search results. Later this year, it plans to test a program that places ads in users' streams.
Twitter is proceeding cautiously with the strategy to avoid upsetting users. The company will not try to stop Ad.ly and other companies from brokering advertising, Twitter's Chief Operating Officer Dick Costolo said in an interview at the company's Chirp conference Wednesday.
"Users will decide if those things are good or bad," Costolo said.
Megan Calhoun, the 38-year-old mother of two from Ross, Calif., who created TwitterMoms to help fellow mommy bloggers connect with brands and earn some extra cash, said she was stunned she could make as much as $1,500 a pop to plug products on Twitter.
"I couldn't believe that someone would pay me that much just to tweet once," Calhoun said. "That's totally amazing for 140 characters."
She polled her 360,000 followers, who were split on the idea. As a test, Calhoun accepted an offer on Ad.ly to promote the movie "Dear John," which was being marketed to women. Calhoun, who enjoys a lively back-and-forth each day with her followers on Twitter, was taken aback by the response to the plug: silence.
"I thought I would hear something," she said. She concluded that the Twitter ad "just adds to the noise, really. People see it and don't pay attention. It's almost like getting junk mail. You just kind of ignore it or you have a negative reaction."
Calhoun isn't the only one worried that the concept will turn off Twitter followers. Two Ad.ly advertisers -- including featured advertiser Universal Pictures -- said they experimented with free trials but didn't see the kind of results that would persuade them to pay Twitter users to promote their products. Organic campaigns on Twitter, such as Oprah Winfrey plugging the film "Precious," are far more effective, they said.
Advertisers have experimented with different ways to tap the popularity of online personalities, including paying bloggers for online reviews. But many bloggers shun the controversial pay-per-post practice to avoid alienating their audiences. The Federal Trade Commission has cracked down on bloggers who get freebies or payments to review or promote products, creating mandatory disclosure rules.
Twitter users broadcast 140-character messages known as tweets that others can read on the Web or on mobile phones. Most ads have tags: "#spon" for sponsored Tweets, "#paid" or "#samp" for sample products.
Putting ads in a Twitter stream is no different than putting ads on a website or blog, said Ad.ly founder Sean Rad. But Web strategist Jeremiah Owyang, who counsels the industry on best practices, said bloggers and microbloggers should tread cautiously. Owyang himself tried putting an ad in his Twitter stream only once.
"I asked my community what it thought, and people didn't like it. Some people unfollowed me. It broke trust," he said. "There are ways it can be done right. But it has to be something that you are expecting from that person."
Bindu Reddy, a former Google employee who founded MyLikes, defends paid tweets, saying her company empowers Twitter users who have developed a loyal following in niches such as travel, beauty or comedy to earn some extra cash by promoting products they have used and enjoy.
MyLikes users are given their pick of ads and each day can tailor one to the interests of their audience. Users get paid per click, from 20 cents to $1. Reddy said this form of advertising is potent because "these people are very good at engaging their audience."