Hashtags are essentially a simple way to catalog and connect tweets about a specific topic. They make it easier for users to find additional tweets on a particular subject, while filtering out the incidental tweets that may just coincidentally contain the same keyword. Hashtags are also often used by conference and event organizers as a method of keeping all tweets about the event in a single stream, and they've even been used to coordinate updates during emergencies. In fact, hashtags were first popularized during the 2007 San Diego wildfire, when the tag #sandiegofires was used to identify tweets about the natural disaster.
You can create a hashtag simply by appending the hash symbol to a word, like this: #hashtag.
How to Utilize Existing Hashtags
Because hashtags tend to spread so quickly and because Twitter users often search hashtags for content from people they aren't following, using hashtags can be a great way to extend your reach on Twitter and connect with your current audience in a more meaningful way. There are a wide variety of already established hashtags -- and new ones being created daily -- that you can join. You need to be careful, however, that your use of hashtags is consistent with both your brand and the tag itself.
Unfortunately, as hashtags have become more popular, they've also become a vehicle for spam. You should never use a hashtag on a tweet unrelated to that tag, and you should never stuff your tweets with currently popular hashtags with the sole purpose of appearing in Twitter search results. Proper etiquette dictates that you should only use hashtags if your tweet is actually relevant to the tag's associated meme or topic.
So which tags should you participate in? That depends wholly on your business and your purpose for using Twitter. For example, it's probably a bad idea to participate in the #robotpickuplines hashtag if you own a health club and use your Twitter account to offer customer service to members. But if you own a record shop, you'll more than likely want to join in the #musicmonday hashtag, in which people tweet about what music they're listening to and suggest other musically-inclined users to follow every Monday. Or if you own a restaurant, why not tweet out your specials or some recipes on #tastytuesday.
Use sites like Twubs, a hashtag directory, and What the Trend?, a wiki that attempts to explain what certain hashtags (and other Twitter trends) mean, to locate and identify hashtags that make sense for your business. Also, pay attention to tags being used by your followers and search for them on Twitter to see what sort of tweets are associated with those tags. If it makes sense for your business to jump on board, compose tweets that are on topic and compatible with that hashtag.
How to Start Your Own Hashtags
While you certainly shouldn't use hashtags to describe all of your tweets, they can be very helpful for small businesses as a way to track social media campaigns or create memes that help establish a sense of community and build your company's mindshare among your core customers. The first step in creating a hashtag is deciding on the tag word itself. You should pick something memorable, easy to spell, and perhaps more importantly, as short as possible. Remember that Twitter gives everyone just 140 characters per tweet, so no one wants half of it to be taken up by an unwieldy hashtag.
Once you've figured out the tag itself, the next step is simple: start using it and promoting it. Make sure your tweets using the hashtag are worthwhile and add something of value to the conversation. Promote your tag or the social media campaign that uses the tag via other social media channels, such as your blog or email newsletter. Tweet out calls to action explaining your new tag at regular intervals (but don't overdo it!). For example, let's say you own a bookstore, and you're running a Twitter contest to give out a gift card to your store. Your explanatory tweet might be something like, "What's your favorite summer reading material? Tweet using #beachreads to win a $100 gift certificate to Al's World of Books!"
How to Keep Track of Hashtags
Of course, now that you have people using your new hashtag, you need to be able to keep on top of it so you can respond to participants. One of the easiest ways to track hashtags is by using Twitter search. You can watch people using your hashtag (or any other tag you want to track) in real-time, and subscribe to an RSS feed of the results. Monitter and TweetGrid are two other good web-based dashboards for performing real-time Twitter searches of hashtags.
You can also use the built-in search functionality of popular desktop clients like Seesmic or TweetDeck, or set up alerts on business-oriented Twitter dashboards such as HootSuite or CoTweet.
Image courtesy of I Am Paddy