While normal ads won't work on twitter, viral marketing will. So now, advertisers win by creating content people'll twit about. Perhaps even paying people to advertise to their friends. Shouldn't be hard to introduce with so many people looking for a source of income. Not sure I like where this'll go...
One of the ways I wouldn't mind advertising in Twitter is if I could get a compendium of Tweets emailed to me by Twitter every X hours - they could just put traditional banner advertising in each email as a sponsor link.
One of the things I like about twitter is the short form blogging. One of the things I don't like is having a twitter client distract me every few minutes (so I don't use one) or if I use the site instead, having to flip through a couple of pages of noise to find the little gems contained within.
I think a compendium of tweets would compile these two aspects of twitter, yet also give twitter the ability to make revenue off my attention.
Actually, there already is a service which connects advertisers with Twitter users for paid advertising, but I can't remember the name of it for the life of me.
Fortunately, it hasn't caught on. There isn't much incentive to sign up; advertising makes you look like a tool, the money available is bound to be small, Twitter in general doesn't incur overhead, and people mostly use Twitter for fun.
Perhaps Twitter make it against the TOS, but even that seems overkill. The "viral" nature of Twitter should keep the negative effects of advertising to a minimum.
