Twitter’s Advertising Problem

Twitter has chosen the circuitous route when it comes to building an ad business. The question is whether it’s been too slow.

Last week the service unveiled its latest addition to its ad products: Timely Tweets, a way a brand on the platform can make sure an important update is seen by all its followers. Twitter plans to slowly roll out the ads, which will appear at the top of a user’s timeline when logging in, like its other ad products.

The effort is indicative of the baby steps Twitter is taking to get to an ad model. There is no AdWords equivalent for a stream of short updates. The thinking is that users will rebel if Twitter innundates them with ads. Twitter seems almost embarrassed by having to use ads at all, almost cheekily noting in its post announcing Timely Tweets that it was a feature users asked for.

Twitter’s slow-walk into the advertising business is applauded by many in Silicon Valley as a textbook example of how a tech service has to put its user experience above a business model. Indeed, Twitter’s valuation keeps growing exponentially, even as its ad business remains extremely immature. The last thing Twitter or any hot service wants to do is “pull a MySpace” and litter the place with cheesy ads.

“There’s no question that Twitter has left money on the table by taking their time,” said David Berkowitz, senior director of emerging media and innovation at 360i. “The challenge is, can they keep up their momentum where they continue to maintain agency and marketer attention. He noted that Twitter has barely rolled out ad products it announced in April. They remain limited, presumably for user feedback.

“It sounds like they were waiting for their users to get comfortable with this, but I keep wondering what is the real reason Twitter is taking so long,” he said. “You don’t need a year or longer to get people used to having some kind of advertising.”

The problem with Timely Tweets, according to Berkowitz, is it’s preaching to the choir. Twitter is adamant that it will build ad products that mimic how the service is used. That’s why it’s trying desperately to do ads that aren’t really ads. They’re actually just normal updates that brands make. This is, of course, a bit of a dodge. Take Promoted Trends, probably Twitter’s most successful ad foray. The notion is these are already existing trends that are taking place. That’s not really true. Brands are creating these most times out of thin air.

And that’s fine. It’s advertising, after all. Advertising will remain, even in social media, to some degree an interruption. Many Silicon Valley companies turn their noses up at the ad business altogether. There’s talk that even within Twitter there are factions who see a much larger mission. After all, President Obama credited tweets, in part, for helping to resolve the debt-ceiling impasse. Catering to media buyers seems like small beer compared to that.

“Ii remember meeting with Yahoo when they said they’d never sell an ad on the homepage,” said Greg March, media director at Wieden + Kennedy. “But then the business environment changes.”
At this point, Twitter’s able to charge a premium for products like Promoted Trends because there are so few opportunities. Ian Schafer, CEO of Deep Focus, said at this point Twitter has imposed a scarcity on the ad opportunities available, but it will at some point need to get scale.

“They want to show that they can do incremental things that result in exponential increases,” he said.

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