Associated Press starts ads on Twitter with Samsung as sponsor

SAN FRANCISCO/NEW YORK Tue Jan 8, 2013 6:33am IST

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SAN FRANCISCO/NEW YORK (Reuters) - The Associated Press began using its official Twitter account as an advertising platform on Monday, as the news organization seeks new forms of revenue.

Samsung Electronics Co Ltd (005930.KS) was the first sponsor on the @ap account for breaking news, which is followed by 1.5 million Twitter users. The South Korean electronics maker's initial "SPONSORED TWEET" promoted its events at the 2013 Consumer Electronics Show in Las Vegas this week.

AP did not disclose financial details of the arrangement.

Twitter, which sells ads directly to make money from the social media's monthly base of 200 million users, will not receive any proceeds from the AP-Samsung deal.

The AP called the initiative part of a new business strategy and stressed that sponsored tweets will clearly be labeled to differentiate them from news tweets.

The ads provide AP a new income source as news organizations from newspapers to television face severe revenue declines in the face of high production costs.

While the AP was founded in 1846 by U.S. newspapers as a breaking news conduit, only 22 percent of its revenue comes from member fees. Photo licensing, advertising on its news application AP Mobile and YouTube channel are other revenue streams.

The rise of ad deals reached independently of Twitter could undermine the social medium's own offerings.

A Twitter spokesman said the company does not object to third-party ad tie-ups as long as they comply with its policies.

The company's terms-of-service allow for third-party agreements as long as the endorsement tweets are individually and manually sent - not as part of an automated ad engine.

The AP is not the only news-related company to try its hand at sponsored tweets. The Washington Post Co's WPO.N online magazine Slate, for instance, has sent out a sponsored tweet promoting Samsung's notebook.

The AP joins a fast-growing market that has so far been tested mostly by pop celebrities like Kim Kardashian, Snoop Dogg and Lindsay Lohan, who boast millions of Twitter followers and can sell one-line endorsements for upwards of thousands of dollars each.

Small ad agencies have even emerged to link up marketers with celebrities and their handlers. One Los Angeles start-up, Ad.ly, has raised millions of dollars in venture capital funding to place celebrity endorsements.

But complaints about stealth endorsements on Twitter have surfaced in the past, particularly with its celebrity accounts.

In 2012, Wayne Rooney, the England and Manchester United football star, was censured by the UK Advertising Standards Authority for passing off a Nike (NKE.N) endorsement as an authentic tweet.

There have not been similar high-profile cases in the United States, where the Federal Trade Commission requires paid tweets to contain words such as "ad" to denote their commercial nature.

(Reporting by Gerry Shih in San Francisco and Jennifer Saba in New York; Editing by Richard Chang)

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