Twitter also needs to take care as it begins revving up a brand new machine for injecting ads into its users’ Twitter feeds.
In an attempt to capitalize on all those active eyeballs pouring over its feeds, Twitter has been embedding powerful but limited advertising in its users’ tweets for some time now. In many experts’ opinions it has also executed on that relatively smoothly. The ads placed so far have been relatively unobtrusive, cleanly placed, and appearing sparingly enough not to distract those who aren’t interested in what they’re saying.
Over the next few weeks all of that could change.
Within the next 14 days media giant Twitter is introducing a series of new ad formats. (See “Coming to Your Twitter Feed: 15 New Types of Ads”, The Wall Street Journal, April 4, 2014.) They are targeting specific customers and topic areas which have proven easiest to turn into new revenue just by clicking on a link. Those areas are often tied to mobile games, direct purchases, and easily purchased subscriptions of various kinds.
More ads, properly deployed and carefully crafted, could mean much higher revenues for Twitter in short order. It would also be quite welcome for Twitter’s investors, since post-IPO the company’s relatively low earnings of only $219.6M in the fourth quarter have put a significant drag on its stock price. As of yesterday TWTR closed down 2.07% for the day to 43.14, not far above its IPO offering price of $39.06.
The challenge is how to roll out these ads with maximum impact for its shareholders and advertisers while minimizing backlash from Twitter’s highly valued user base.
Facebook did it with great success for the shareholders but somewhat unclear long-term impact for either of the other stakeholders. Advertisers have become wary of the calculable value of the ads in converting clicks into customers. Facebook users have also shown significant backlash as they see more and more interruptions in their once pristine news feeds.
Twitter thinks they have the right formula based on the existing results with their first wave of ads. And if they can find a way to insert more engaging and effective content (in terms of capturing substantive new revenue for the advertisers), this just might be the jolt the company’s fledgling bottom line needs right now.
So – watch your own Twitter feeds on this over the next month and see what you think. Did they pull this off better than Facebook? Or did they just knock more than a few feathers off their once high-flying company?