Microblogging service Twitter introduced a new advertising program on Tuesday, in a first step to prove that its popularity among web users can translate into a self-sustaining business.

Known as “Promoted Tweets,” the ad program represents a much-anticipated move to address concerns about the revenue generating potential at Twitter and marks a key milestone on the road to an initial public offering, analysts said.

“Over the years, we’ve resisted introducing a traditional Web advertising model because we wanted to optimize for value before profit,” wrote Twitter co-founder Biz Stone in a post on the company’s blog on Tuesday.

Twitter, which lets users send short, 140-character text messages, or Tweets, to groups of “followers,” is among the new breed of popular Internet social networking services, along with Facebook and LinkedIn.

The company struck deals to provide its stream of Tweets to Google Inc and Microsoft Corp for inclusion in their Web search results last year, but Tuesday’s ad service represents the first fruits of an effort to build a business model around a recurring revenue stream.

Twitter said that it was currently testing Promoted Tweets with a handful of advertisers including Starbucks Corp, Best Buy Co, Sony Corp’s Sony Pictures and Virgin America. Under the program, a Twitter message, such as a promotional offer by Starbucks, will appear at the top of search results on Twitter for keywords that companies specifically purchase from Twitter.

As Twitter broadens the program to include more advertisers, spokesman Sean Garret said, keywords on Twitter’s search engine will be opened to competitive bidding by advertisers, similar to the way that Google’s lucrative paid search advertising program operates.

Twitter also said on its blog Tuesday that the company planned to eventually serve Promoted Tweets ads beyond its search feature, offering the ads directly within users’ message streams.

Josh Bernoff, a Forrester Research analyst, said Twitter needs to roll out the ad program more aggressively to advertisers if it hopes to turn its service into a money-making tool that can generate hundreds of millions of dollars in revenue.

“A handful of advertisers is not going to get them where they want to go,” said Bernoff. “Scale is where the success is.”

Twitter does not release information about its number of users, but comScore said the site had 22.3 million unique visitors in March in the United States, up roughly 140 percent year-over-year.

The ad program represents Twitter’s latest move to evolve from a hot start-up into a financially focused enterprise. The company has filled out its management team with executives with experience at Google and Walt Disney Co’s Pixar Animation Studios over the past year.

Twitter’s Garrett said that Twitter has no plans for an initial public offering, though as one of the Internet’s most popular Web companies, analysts believe Twitter could eventually make for an attractive IPO candidate.

Cowen and Company analyst Jim Friedland said Twitter needed to first show investors that the new ad model can deliver sustainable revenue.

“Even if this ad opportunity is incredibly successful, it’s still going to be a while before they have the track record to go public,” said Friedland. He pointed to Google, which unveiled its AdWords program several years before floating shares to the public in 2004.

Twitter is backed by investors including Benchmark Capital, Spark Capital and Union Square Ventures. In September, the company raised USD 100 million in a funding round that valued the company at USD 1 billion, according to a person familiar with the matter.

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Google has been giving a lot of love and attention to its Apps software suite to make it harder for businesses to resist a switch to the cloud. Today, the company is raising the stakes again by adding, well, more apps.

At a developer’s event tonight, Google is unveiling details of its Apps Marketplace for Google Apps, a place for companies to “discover, buy and install” third-party business apps that can be integrated into the other apps within the suite, as well as the data in them. Initially, there are about 50 companies that have developed apps for the new marketplace – ranging from Box.net and eFax to TripIt and Intuit, which is launching an online payroll app for small businesses that allows business owners a new way to run payroll, pay taxes and allow employees to review their paystubs.

I can already see the possibilities here – the travel department integrating reservations with calendars and contact lists, project managers controlling which documents are shared and with whom. And because the app integration is managed at the company’s admin level, permissions to integrate data and the controls to keep it secure is managed by the company itself.

In a blog post, company explained like this -
Once installed to a company’s domain, these third-party applications work like native Google applications. With administrator approval, they may interact with calendar, email, document and/or contact data to increase productivity. Administrators can manage the applications from the familiar Google Apps control panel, and employees can open them from within Google Apps. With OpenID integration, Google Apps users can access the other applications without signing in separately to each. The Google Apps Marketplace eliminates the worry about software updates, keeping track of different passwords and manual syncing and sharing of data, thereby increasing business productivity and lessening frustrations for users and IT administrators alike. That’s the power of the cloud.

Later this year, the company is launching a revenue-sharing model to encourage developers to submit business apps for Google Apps. Under that model, developers determine their own pricing and terms for the app, Google handles the billing for the developers and collects 20 percent of the revenue as its share.

The move also brings more life to cloud-based business apps. Salesforce, which has been integrated with Google Apps for nearly two years, has an App Exchange marketplace, as well, giving business owners even more control over efficiency.

And, of course, it raises the exposure of the cloud and the efficiency tools that it offers for business customers – something that Google execs have been touting for some time now.

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Google’s VP of online sales and operations has made the bold statement that in three years time desktop computers will be irrelevant.

Speaking at UCD in Dublin yesterday, Google Chief John Herlihy said that smartphones enhance Google’s mission to make information universal, adding that in Japan, more research is being done on cell phones than on PCs. Herlihy predicted that soon smartphones will be the center of it all.

“Mobile makes the world’s information universally accessible,” he said. “Because there’s more information and because it will be hard to sift through it all, that’s why search will become more and more important. This will create new opportunities for new entrepreneurs to create new business models – ubiquity first, revenue later.”

Herlihy’s statements have caused quite a stir in the tech world. There are those who wholeheartedly agree but Silicon Republic, who first reported the story, says that audience members were baffled. Indeed it’s hard to imagine office cubicles without desktops and even harder to imagine laptops meeting the needs of hardcore PC gamers.

But, whether you agree with his sentiments or not, it is clear the direction Google is taking as a company. Silicon Republic reports that, not too long ago, CEO Eric Schmidt told an audience at the Mobile World Congress that the company was working on products from a ‘mobile first’ prospective.

“Every recent product announcement we have made – and of course we have a desktop version – is being made from the point of view of it being used on a high-performance mobile phone on all the browsers that are available,” SR cites Schmidt as saying. “Now the programmers want to work on those apps for mobile that you can’t get on a desktop – applications that are personal and location-aware.”

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Google is to add automatic captions to the tens of millions of English-language videos it hosts on YouTube, the web search giant said Friday.

The move will make the videos more accessible to deaf viewers but will also help Google index the content and supply relevant ads alongside it, analysts said.

Google has been experimenting with the automated captions for several months with a handful of high profile partners like the University of California, Berkeley, Yale University and National Geographic. All other captions on YouTube videos were provided by the videos’ producers.

Google has been working on speech recognition technology for some five years, and uses the technology to transcribe audio voice mails through its Google Voice service, and to provide spoken Web searches from smart phones.

However, engineers warned that the technology is far from perfect and that the machine translations are sure to contain mistakes.

“We know it’s not perfect, and sometimes it will be funny,” said Google engineer Ken Harrenstien, who is deaf. “But it’s better than nothing.”

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Google said Tuesday that Stephanie Tilenius was joining the company as vice president of commerce, a new position.

Google said little about the role of Ms. Tilenius, a veteran eBay executive who announced in late September that she would leave that company. People close to Google said Ms. Tilenius would oversee Google Checkout, the company’s online payments system, and other e-commerce efforts. Her hiring suggests a push by Google into online commerce, though it is not clear exactly what Google’s plans are.

If Google makes inroads into e-commerce, it could cause headaches for a number of online retailers, as many of them get a majority of their traffic from Google, both through Web search and search ads. EBay, for example, relies on Google for much of its traffic and is one of the biggest advertisers on Google. The two companies’ relationship has already had its rocky moments, as Google positioned Checkout as a rival to PayPal, eBay’s online payment service.

Ms. Tilenius held a variety of executive roles at eBay since arriving there in 2001. Most recently, she ran eBay North America and global product management for eBay Marketplaces. Earlier, she headed PayPal’s merchant services business and ran eBay Motors and eBay Asia Pacific and Latin America. She was a co-founder of PlanetRx.com, an early e-commerce company.

EBay announced the departure of Ms. Tilenius as part of a reorganization in September, saying she would leave the company by early this year.

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