How Twitter plans to make more money, in five not-so-easy steps
By Bloomberg
Twitter last month fell short on its revenue projections for the first time as a public company, spooking investors and tanking the stock. All eyes are on the sales team, led by Adam Bain, as they chart the company's strategy for growth over the next few years.
The way Bain sees it, the work the team has done building the business model to $1.4 billion in annual revenue was the easy part. It involved getting advertisers on board with explanations about what Twitter is and how it could strategically fit into an ad campaign. Now the company has to branch out into areas that involve understanding not just the advertisers' needs, but new countries, Web properties and technologies.
"Now the real work is going to happen, in terms of having all these flowers bloom that we've planted," he said. The team is disappointed about the recent quarter, but Bain says Twitter's current sales are a fraction of what it will eventually have. Here are his priorities:1. International
While 78 percent of Twitter's users come from outside the United States, only 34 percent of its revenue is generated overseas. The company hasn't even opened up the ability for people to pay to promote their tweets — the company's main form of advertising — in all of its markets. Bain is especially interested in expanding in markets like Indonesia and Brazil, using creative campaigns to drive Twitter downloads as well as ad sales. For example, Twitter put hashtags on Trident gum packages in Brazil, offering a free song to whoever used them. 2. Self-serve ads
Twitter wants to make money off not just the big names in advertising, but anyone who wants their tweets to get a little extra viewership. The company recently started putting analytics with every tweet, so people can see how many people saw the post, clicked on their links or viewed their profile. Each time someone looks up the analytics, there's an option to pay to promote the tweet further.3. Research
Bain said that in the last year his team has spent the most time trying to show how tweets actually lead to purchases. It's key for the company's near-term success, too. The last quarterly miss happened because of a lack of demand for the company's direct-response ads, or promotions where advertisers pay for a particular objective, like a sale.
"The measurement infrastructure is completely broken, and there are all these things beyond an impression of a tweet: a favorite, a retweet, following, clicking," Bain said. "There is a very interesting canvas for attribution that we are just starting to paint on."
"Attribution" is the industry jargon for getting credit when an ad works. 4. Organizing content
About 500 million tweets are posted each day, and they mostly pour out in reverse-chronological order to whoever is following their authors. Twitter has been revamping its search product to organize tweets more clearly around trends, but that's not enough, Bain said. Stay tuned for products or features that could group tweets around interest, geography, events and more.
"It's not organized in interesting ways yet for consumers," he said. "If we can get better at organizing content that's specifically tailored to you, the ads will bring a whole new level of context that they don't have today."5. Ads outside of Twitter
That "promoted tweet" ad type is already popping up on other sites, like Yahoo Japan and Flipboard. Expect Bain to take that strategy further. The MoPub mobile advertising exchange, which distributes ads on mobile applications not owned by Twitter, is also helping Twitter expanding the real estate for ads it sells.
"How do we get inventory that's unique and exclusive for these Twitter advertisers who are interested in expanding beyond the owned and operated experience?" Janae McDonough, the senior director of MoPub, said in an interview. "Today the efforts are very new."
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