Twitter recently announced that it will be introducing a self-serve ad platform targeting smaller businesses with tighter budgets. Previously, Twitter was enforcing a hard line of $25k minimum to run paid advertising campaigns, which centered around two of their main offerings: Promoted Accounts and Promoted Tweets. Promoted Trends are an additional offering, but better catered to larger brands rather than small businesses priced at $120k per day. Now, small and midsize businesses will be able to purchase “the most engaging innovative ads on the web” (Twitter’s own tagline) without meeting minimums.
Twitter Benefits are Twofold
This expansion seems to benefit the San Francisco-based company in two basic, yet essential ways:
- Broadens potential revenue opportunities
- Expands paid advertising reach
EMarketer projected that of its $700 million net capital, Twitter’s 2011 ad revenue alone was approximately $139.5 million, about 20% of their net capital. Estimates for 2012 predict ad revenue will increase to over $259.9 million. The correlation between increasing the pool of potential advertisers and fattening their bottom line appeals to Twitter’s long-held ambition to elbow their way into the big leagues alongside profit-margin heavyweights Google ($36.5 billion in total ad revenue) and Facebook ($3.2 billion). While the launch of the small business self-serve feature is not expected to net huge ROI initially, it is a significant step in Twitter’s holistic moneymaking model and long-term revenue growth. Through this new program, small businesses that have opted in will be able to manually set bids for Promoted Accounts on a cost-per-follower basis. For Promoted Tweets, advertisers pay on a cost-per-engagement basis, only paying when users directly engage with tweets; i.e. retweeting, clicking through embedded links, or opting to follow. While larger brands commonly bid on keywords, interests and hashtags around major advertising events, smaller brands will have to focus on buying highly targeted, unique terms, while simultaneously using Twitter’s localization geo-targeting functionality to keep their advertising dollars closer to home. These small-scale advertisers will now be able to set their own campaign budgets and write their own copy, versus previously having to communicate campaign settings via Twitter representatives.
In the preliminary phase of the program, Twitter is joining up with American Express to add a qualifying element to the business selection process. By navigating to an AE-specific Twitter redirect, American Express card members and merchants are able to register for this self-serve option on a first-come, first-serve basis. As an incentive for increased spend down the road, American Express is also giving away $100 in advertising credits, eligible for use towards Promoted Tweets and Promoted Accounts. Many point to Twitter’s partnership with AE as a vital way of vetting and eliminating potential spammers from beating the system, while simultaneously allowing Twitter to keep a tight rein on carefully rolling out new products with minimal backlash. It also isn’t any surprise that to register for the offering, users are required to follow @AmericanExpress.
Putting Self-Service into Practice
Going live in late March and only available to the first 10,000 businesses that sign up, the new self-service platform will likely be the first step on a long path of increased profitability and maximum scale for the microblog phenomenon. By eliminating the need for constant support and manual uploads by Twitter representatives, buying ad space on Twitter will become easier, faster and more scalable. Both established brands seeking to up their presence and consumer awareness as well as newcomers will find paid advertising on Twitter more affordable. Only time will tell how this new development will affect Twitter’s profit margin and its movement to position for a Facebook-like IPO.
Expanding Twitter’s Mobile Presence
Twitter recently began blasting Promoted Tweets across its iPhone and Android mobile applications. These will now be incorporated into mobile users’ timelines when they log into the service on their phones. This integration across devices will add a new advertising experience for mobile users and expand Twitter’s reach capabilities. This marks another milestone in the growing impact of Twitter’s paid advertising, as more than half of its 100 million active users access Twitter via mobile devices. By leveraging its growing mobile user base with this opportunity for increased ad revenue, Twitter seems to be staying busy expanding its suite of products, effectively improving its ROI and broadening its ever-growing sphere of influence.