Are Twitter digital ads a safe bet?
- Summary:
- Moving Twitter's product focus to one where engagement figures highly could allow focused Twitter digital ads to flourish. Will it encourage more ad spend? We will see.
Summary
In the battle for digital advertising dollars, Google, Facebook and Twitter are the properties that are often top of mind. Google represents a well understood model and Facebook is plowing its own furrow. Placing a bet on Twitter digital ads has never been a clear cut safe bet. Maybe that's changing as the com,pany rethinks its product strategy..
Q2 numbers
Twitter's most recent Q2 earnings announcement suggests the company may have achieved something of a turning point. While the market was expecting revenue of $283 million, Twitter turned in a surprise of $312 million. It even managed to beat out analysts expected loss of 1 cent per share to 2 cents profit as measured by non-GAAP numbers. The real loss was an eye popping $145 million.That kind of performance always puts a smile on the faces of Wall Street analysts. Nothing new there.
Explaining the result, Twitter execs pointed out that the World Cup blitz certainly helped. If you are on Twitter then during that event, you couldn't go a day without some message or other popping up reminding you to glom onto the topic. One thing is clear, the World Cup did garner tremendous interest in the US. And while Twitter didn't provide specific color on that aspect, it must have had a significant impact.
But there was far more to Twitter's results than meets the eye or the headlines surrounding it.
Digital experiences and digital behaviors
If you are a regular Twitter user then it would be difficult to escape the fact that the company is putting far more effort into getting its users to engage with the platform. I get regular emails that go something like; 'You may know these people.' It is a subliminal way of enticing me to grow my Twitter network.
According to Dick Costolo, Twitter CEO, the company is trying to move towards developing richer experiences for its users:
...we brought in a number of great product folks from a variety of places around the digital landscape. Within the product framework that we've laid out, those teams absolutely have the leeway and the latitude to experiment with different kinds of experiences and to innovate in ways that they may have come up with on their own.\
Quite how this works remains something of a mystery. Twitter users behave in many different ways. I for example send out a good number of Tweets and usually see some sort of play. But then I've been working this thing for quite a few years. I have a good idea who are my core network buddies and in 90% of cases, I know them personally. Even so, these are a fraction of the 11,600+ followers that Twitter says I have.
On the other hand I don't follow that many people. I follow just enough for me to get what I need from the service. And at times, I'll have a clear out of those with whom there is very little action.
Placed in that context and with established behavior, these Twitter reminders are starting to become something of an annoyance. They're certainly not substantially modifying my behavior around Twitter use although nowadays I occasionally skim over the 'suggestions' to see if there are people with whom I am willing to share and learn.
Others I know do automatic follow back of any Twitter handle that pops up. They grow these large 'networks' but I am betting most of them are of almost zero value. If you strip out the robots, I am betting that less than 1-2% are people with whom there is an ongoing relationship, whether digital or built upon a real life relationship.
Private conversations?
Even with these fractional numbers, more money is coming to Twitter so how will this go forward? Costolo believes in the idea of taking interesting public conversations among groups of people and then taking them private:
So, taking a public tweet, and being able to have a conversation about that public tweet with a private group of people is a compelling use case. One we see internally as something a lot of us would like to do and one that will be a real engagement driver for us.
You can do that in Skype so why would you do it in Twitter? The logical answer is that it reduces friction for the user and would not require stepping outside of the application.
Twitter digital ads?
From Twitter's perspective, it also means having a much better chance of serving up truly contextual Twitter digital ads that play to that conversation.
That has the potential to be a very powerful way of getting the best out of advertising dollar spend. Such ads would almost certainly command a premium. How the company executes is all important but it is an interesting prospect.
In the meantime, we can expect to see Twitter running more experiments of the kind it ran during the World Cup at other major sporting events. This will help establish patterns of activity and engagement. It will be very interesting to see how this plays in the context of international events. That will give Twitter a feel for the cultural differences across different geographies, something that is often lacking in social media content.
Verdict
- I've been skeptical about Twitter's long term ability to grow into a platform that has enough functionality to keep users engaged sufficiently for Twitter digital ads to really work. The most recent results would suggest that if nothing else, marketers are prepared to give it a try. This works when marketers think they can garner something out of the millions of eyeballs that are interested in the World Cup and similar events.
- I would be very interested to see how public conversations can be taken private. There have been plenty of occasions where that makes sense. Instead of hefting multiple direct message conversations, private hangouts of the kind you can run at Google would be a very good idea. How that gets monetized may seem obvious but will require considerable invention.