Digital Advertising

Why Twitter Will Dominate Digital Advertising

KunalGupta1Kunal Gupta is the CEO of Polar (formerly Polar Mobile), a computer software firm based in Toronto. Polar originally focused on mobile, but has rebranded to expand its mission, now specializing in native ads. This is Kunal’s first contribution to The Makegood.

Advertisers pay attention. Twitter will soon dominate digital advertising. With November 6th’s IPO, questions of the companies’ long-term profitability again dominate the headlines. I am bullish on their long-term revenue prospects for two reasons: mobile & native ads.

Winning in mobile

Interesting and relevant figures appeared since Twitter made their prospectus public in early October: Almost 90% of their revenue comes from ads, 65% of that from mobile, and 75% of Twitter usage happens on mobile.

This data combined with the little-talked-about but hugely-informing purchase of MoPub at the end of the summer paints a picture of where Twitter sees its business heading. With its desktop site, mobile offerings, and comprehensive network of Follow buttons and embedded tweets, coupled with the ad serving technology it inherits with the MoPub purchase, Twitter can track what you’re searching for on their own site, what sites you’re visiting, and importantly, where and how you are making purchases and purchasing decisions. This links together what was once thought of as disparate groups; those using Twitter and those spending money on the service.

Native ads everywhere

A speculative guess at another avenue in which Twitter may increase native ad placements stems from the attention they’ve lavished on embedded tweets as of late. Richer media and larger display options attempt to solve the problem that many people know about twitter, but not everyone uses it as it was intended or at all.

As embedded tweets and services like Storify gain traction as story-telling tools, Twitter has the option to present content to users and non-users alike. Taking a look at the implementation of Twitter Headlines, (where related content appears alongside the original tweet) offers a glimpse into how Twitter could introduce native advertising into this vastly used resource. Is it far-fetched to think ads emulating the look and feel of this content could make their way into this content? Not really when you consider the success of Twitter’s current advertising operation is based on sponsored content – promoted trends & tweets and suggested follows which mimic the look and feel of the rest of the site’s functionality.

Learning from Facebook

Where Facebook is showing that approach works is with advertising within its mobile app for other mobile apps. With the ability to push straight to the download instructions in the iTunes App Store or Google Play, the platform has driven 145 million app downloads to half of the top-grossing apps and almost $900 million in revenue from mobile ads like those, as they revealed in their Q3 earnings call.

For those wondering where the ROI is when it comes to similar approaches on Twitter, the company released data last month detailing the effects of a promoted trend campaign. The big takeaway was an increase in brand advocacy, greater purchase consideration and consistent impact on earned media.

Connecting the dots with TV

Even though Twitter’s user base is less than Facebook’s, the uptick on these metrics proves it has great value, especially when you make it part of a larger connected media campaign. A highlight of Advertising Week 2013 was the presentation on Twitter Amplify, the company’s TV focused ad initiative. Users who Tweet about a televised program or event will receive sponsored content from those advertisers which are also running commercials on that program. “Users who saw a TV commercial and then engaged in some fashion with a Twitter ad for the same product indicated they were 58 per cent more likely to buy it than people who saw just the TV ad,” said Twitter executive Matt Derella. Though sheepish with details, CBS has 42 products they intend to showcase with Amplify in the coming months.

In Summary

The future of digital advertising is mobile + native ads. Twitter’s plans talk very little about their desktop ambitions, and rather focus entirely on mobile. I expect the average user to engage with at least 2-3 brand messages (i.e. native ads) per day, on Twitter, on mobile.

With contribution from Mark Cluett, Polar.