Twitter’s IPO filing yesterday revealed that it is on track to generate some $US500 million in annual ad revenue by year’s end.
How does Twitter advertising work? Twitter’s advertising efforts are analogous to Facebook’s efforts. They are focused on in-stream ads, and also on leveraging naturally-occurring social activity on the site.
In a recent report from BI Intelligence, we analyse the state of social media advertising and where it is heading, offering a comprehensive guide and examination of the advertising ecosystems on Facebook and Twitter, analysing each of their principal ad products and concepts behind them, offer a primer on Tumblr as an emerging ad medium, and detail how mobile is an important part of this story as mobile-friendly as native ad formats fuel growth in the market.
Here’s a brief overview of the Twitter advertising ecosystem:
- Promoted Trends: Twitter introduced “promoted trends” in 2010 as a way for brands to spur conversation around a certain topic. Since trending topics tend to be self-perpetuating — the popularity of certain trends fuel further conversation — this is an attractive proposition for brands. Twitter is now charging $US200,000 a day for promoted trends, up from $US150,000 last year and $US80,000 when they were introduced. However, promoted trends have positive and negative attributes that brands need to consider.
- Promoted Tweets: Promoted tweets are tweets that have been turned into ad units. This is Twitter’s biggest initiative, similar to Facebook’s promoted posts and page post ads. Twitter lets advertisers target users by location, interests, gender, and device. The great thing about promoted tweets, from Twitter’s perspective, is that they are perfectly transferable to mobile. They are in-stream in the timeline and so appear front-and-center on mobile devices. Last year, CEO Dick Costolo said that mobile ad revenue now outpaces desktop ad revenues on some days.
- Keyword Targeting: Twitter now also lets advertisers target users based on specific keywords in their tweets. Keyword targeting was introduced just a few months ago, and according to Twitter, will allow advertisers to look in tweets for “signals of intent” and “reach users at the right moment, in the right context.” For example, if a user regularly tweets about coffee, a local cafe or coffee roaster can aim promoted tweets at them. Twitter prices out advertising based on engagement, not impressions. Advertisers pay the company by the click or the number of retweets or favourites the tweet generates. In other words, Facebook’s recent move to CPA or cost-per-action ads is something that has always been a component of Twitter’s ad business.
- Video Ads: Twitter has been quietly rolling out video ad capabilities in recent months. The concept is pretty straightforward: The content owner embeds a video in a tweet, a sponsor shows a pre-roll ad, and the content owner and Twitter split the ad revenue. Twitter is pitching that they can put the content in front of a receptive audience, thanks to proprietary analytics that help Twitter see what kind of TV content its audiences are watching, and serve them ads based on that content. That was part of the reasoning behind Twitter’s acquisition of Bluefin Labs last year. Bluefin is able to analyse Twitter chatter for clues into video audience sentiment and engagement.
Twitter’s ad efforts suggest something of an emerging consensus in social media advertising around the user stream as the ideal spot for ad placements and the focus of new ad products.
As this consensus develops, Twitter is introducing new ad formats and capabilities that are helping marketers and brands reach audiences on Twitter in ways that were not previously possible.
In full, the report includes:
- The State Of Social Media Advertising And Where It’s Headed
- A Guide To The Facebook Advertising Ecosystem
- A Guide To The Twitter Advertising Ecosystem
- A Primer On Tumblr’s New Ad Products
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