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15.10.15

Twitter Expands Self-Service Ads, Opens Access to Mobile Ad Exchange In Effort to Boost Internal Ad Revenue

Katie Hom, Digital Marketing Academist

 

Social media stalwart Twitter has seen a lot of internal changes this year as CEO Dick Costolo stepped down as CEO on July 1, and Jack Dorsey, the company’s co-founder and former CEO, took over as interim CEO. (Dorsey has just been confirmed as Twitter’s permanent CEO, while still retaining his CEO position at mobile-payments company Square.) Costolo’s biggest struggle as Twitter’s CEO was his inability to grow the company’s user base at a faster pace; a study by BI Intelligence shows a clear downward trend in the number of monthly active users. According to Business Insider, Twitter was able to add 2 million monthly active users (excluding SMS) between Q1 and Q2 of 2015, in comparison to Facebook, which added 32 million daily - not monthly - active users. As of Q2, Facebook reported 968 million daily users (with 164 million coming from the United States and Canada), whereas Twitter reported 304 million monthly active users excluding SMS (316 million MAU’s including SMS), with zero growth from the United States. To put this into perspective, the number of people in the United States using Facebook every day was higher than the number of people in the entire world using Twitter every month.

 

In the face of decelerating global user growth and stagnant U.S. growth, Twitter has taken critical steps to ensure that lackluster user growth won’t negatively affect the company’s ad revenue. In an effort to attract new advertisers, Twitter recently expanded its self-service advertising (“promoted tweets”) to 167 more countries and territories, allowing for small and medium-sized businesses in more than 200 countries to immediately launch Twitter ad campaigns, without an account representative. Some of the countries that will now be able to use promoted tweets include Saudi Arabia, Pakistan, Greece, Iceland, Turkey, Malaysia, Portugal and Bangladesh. This is an important step for the company, since the U.S. accounted for 63% of Twitter’s Q2 revenue, despite the fact that all of the company’s user growth has been overseas.

 

Not only is the company expanding the pool of advertisers who can use promoted tweets, but it’s offering more tools and capabilities for advertisers on Twitter - notably, the ability to advertise promoted tweets and videos with ads that appear in other apps. Rather than simply including a link that takes users out of Twitter to the advertiser’s landing page, marketers can now run promoted tweets and videos on thousands of apps within MoPub, a mobile ad exchange that Twitter bought in September 2013 and incorporated into its publisher network, Twitter Audience Platform. MoPub gives advertisers unprecedented access to thousands of apps and more than 700 million users within the MoPub network, as well as the ability to show their promoted tweets and ads in new ad formats, such as video, native ads, banners and interstitials. Users on apps within the MoPub network - for example, Words with Friends - can encounter a promoted tweet while using Words with Friends, and if they decide to click on the promoted tweet, the user will be taken back to the advertiser’s Twitter page. Promoted tweets beyond Twitter hold enormous profit potential for advertisers: Samsung, the first advertiser to promote tweets and videos through the MoPub network, reported a 365% increase in video views and a 84% decrease in cost-per-view.

 

Twitter has also introduced new payment options for advertisers, including objective-based pricing, which lets companies select which user action they want to pay for, such as submitting an email address. Advertisers can also pay to promote tweets leading up to live streams, tweets that include the link to the live stream, and tweets after the stream featuring the completed video. Earlier this year, Twitter updated its ad policy so advertisers are only charged if videos are shown 100% in-view and play for at least three seconds.

 

All of these efforts to attract and retain advertisers on Twitter may be paying off: eMarketer predicts that Twitter’s ad revenue will increase by 61.8% this year to $2.03 billion. However, this still doesn’t solve the long-term issue of attracting new users. As eMarketer principal analyst Debra Aho Williamson stated, “Twitter’s slowing user growth is impacting its ad business. Twitter has improved its ad targeting capabilities, and it still has a lock on real-time conversation. However, advertisers want to reach a mass audience and that’s harder to do on Twitter than Facebook.” Although Twitter’s investment in its advertisers could attract more interest and ad revenue than ever before, this could prove to be a double-edged sword as a growing number of advertisers compete for the attention of a shrinking pool of new customers, which could degrade user experience and contribute to Twitter’s stagnant user growth.

 


Needless to say, Twitter’s new CEO has an upward battle to fight ahead of him. Despite Twitter’s new ad serving tools, improved analytics, and diverse payment options, it remains to be seen if Dorsey can successfully grow the company’s user base, or if Twitter’s future is one of continued stagnation.