By Sarah Lokitis
Dec 7, 2011
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Twitter has ramped up its ad business exponentially in 2011. Promoted Tweets in Search started as the only method of advertising, however now Twitter offers Promoted Tweets, Promoted Trends, and Promoted Accounts. Twitter is also currently experimenting with a self-serve platform with a small group of advertisers. With the new self-serve platform, advertisers can set up and run their own promoted products campaigns. Once the platform is tested, it will be scaled and rolled out to all advertisers.
In a recent interview, Adam Bain, Chief Revenue Officer of Twitter, stated that 18 months ago there were 6 advertisers on Twitter and now there are over 2,400 with an 80% renewal rate. Advertisers are using Twitter to reach an audience where there are 250 million tweets and 50 million users per day.
As explained in the interview and in a recent Twitter blog post, advertisers are paying for the Promoted Tweets campaign on a Cost-per-Engagement (CPE) basis. Paying based on outcome creates an out for advertisers if the campaign is a flop, however Bain did not say how much advertisers are charged per engagement. According to a Twitter Marketing session at SMX, the lowest commitment you can make is a $5000/month spend and a promoted trend campaign costs a $120,000 flat fee.
Adam Bain gave several examples of companies advertising on Twitter and their success rate measured in terms of engagement – a click on the link, a retweet, adding as a favorite, or replying back to the account. Bain stated there is a 3-5% Promoted Tweets engagement rate, which is higher than display advertising – measured by clicks.
Promoted Tweets in timelines are beginning to roll out and for the most part are not facing user revolt, like when Facebook made interface changes. Ellis Hamburger at Business Insider stated, “Promoted Tweets really aren’t that much different from TV commercials—brief interruptions from your content.” We all know Twitter needed a source of revenue and integrating advertising as a continuation of the user experience is a great way to do it.
50% of the people using Twitter are doing so through a mobile or tablet device – either consuming tweets or tweeting. There is more Twitter interaction with TV as advertisers use hashtags in commercials and even ask for participation during TV shows through Twitter. According to a study by Nielsen, 40% of tablet and smartphone owners use their device while watching TV on a daily basis. As Twitter continues to enter mainstream use, television shows and advertisers who use hashtags or ask for engagement on their Twitter account will see growth.
While Twitter advertising campaigns lead to increased followers, mentions, retweets, and engagement, there is still a discrepancy between Twitter engagement and business revenue goals. Twitter can help connect fans, spread brand awareness and help companies join in to the conversation, but Twitter needs to show value in sales and ratings before it proves its worth to advertisers and marketers. Comment below, find me on Twitter @Lokitis, or find me on Google+ +Sarah Lokitis.