When Twitter launched in 2006, Facebook was just starting to experiment with advertising on its social network. Advertising, or any business model, wasn’t even part of the equation for Twitter. Six years, and several iterations later, and now Twitter’s own ad serving approach has becoming a genuine rival to Facebook’s.
And Twitter’s latest tweaks to its ad business – interest-based targeting and lower bid prices – could help it pull ahead, analysts say.
Prior this week’s update, Twitter advertisers could target advertising based on the location and type of hardware people were using to access Twitter (either a computer, or some flavor of mobile device). But if say, a clothing company wanted to target individuals with ads, those people would have to either already “follow” the fashion label on Twitter, have opted-in to messages from the company or match some vague profile of those people who do follow the clothing company.
With the new ad features, advertisers can show their ad to anyone based on indications of what they like. So if you are tweeting about the pie you just pulled from the oven, or follow some famous chef, you might start getting ads from food companies.
Every account you follow and tweet you reply to tells Twitter a little bit more about your interests. Using the information it collects from each user, Twitter has created a list of about 375 topics, such as football, dogs, or comedy television, that advertisers can choose from when targeting their ads. There are 25 general-interest categories, like sports or food, and more than 350 specific-interest categories, like baseball or baking.
Advertisers can also isolate a specific Twitter handle to create custom interest categories. “You can give our system a username, we’ll look at the follower base of that username and discern interests that are most prominent,” says Twitter’s head of product marketing Guy Yali. “Then we’ll help connect the message to people on Twitter that have those interests.”
For example, if Coca-Cola wanted to send a promoted tweet to baseball fans, it could type in the Giants’ Twitter handle (@SFGiants) in the interest-targeting menu. When the ad campaign goes live, Twitter will show the ad to users that are interested in baseball and the Giants.
“Twitter is doing what we always thought Facebook was going to do — create very tight targeting between ad content and what they know about their users,” says tech analyst Rob Enderle. He says Facebook has done a terrible job at connecting ads to its users, and Twitter has taken that to heart when creating their ad platform. Twitter’s new advertising feature, if it works as well as Twitter says, could make advertising on the micro-blogging site more enticing than advertising on Facebook. “We’ll have to look at execution, but on paper it looks like they will create ads you actually care about, and thus create a very high conversion rate,” Enderle says.
Hoping to attract more advertisers, Twitter also announced it has lowered the minimum starting bid price for its auctions from 50 cents to one penny. That doesn’t necessarily mean cheap ads, but it could attract a new crop of advertisers who may be advertising on Google or Facebook, where the minimum bid is also one cent. “It will definitely raise the interest among small and mid-size businesses that may not have considered Twitter advertising in the past,” says eMarketer analyst Debra Williamson. “Anytime you see one cent, that will juice you to want to try it out.”
Twitter has been carefully adding more targeted features to its ad platform to make sure it doesn’t turn off any of its 140 million active users. Since Twitter ads are placed directly in your stream, there is a fine line between relevant and spam — something Facebook has struggled with. “Facebook appears to be going into spam territory because they haven’t been able to figure out targeting, which is just bizzare given how much information they capture on all of us,” says Enderle. “Hopefully Twitter’s targeting approach will provide the example that Facebook needs.”
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