Twitter is focusing on generating revenue this year, as it rolls out geotargeted Promoted Products like Tweets, Accounts and Trends, and more affordable ads for smaller businesses. However, two similar reports on Monday cast a pall over these efforts, as multiple advertisers and advertising firms spoke up about the low levels of engagement and lack of sales generation produced by Twitter’s flagship ad program.
Promoted Tweets, Trends and Accounts – all part of the Promoted Products suite – are, in addition to selling tweets from the firehose, Twitter’s bread and butter. They need to work in order to Twitter to have a sustainable business model. And while big names like McDonalds and Starbucks have been repeat customers, smaller businesses aren’t so warm to the idea of buying a tweet.
Two stories appeared on Investors.com on Monday that both detailed the reluctance that small businesses have when considering buying a Promoted Product.
The first story on Investors.com focused on chief executives from online marketing firms explaining why Twitter wasn’t the online ad vehicle of choice for most of their clients. For instance, Hilary Bressler, chief executive of .Com Marketing, has this to say:
“It’s more about image and branding. For a lot of small and medium-size businesses, if they spend $10,000 to $30,000 on a campaign they need to see a 4% to 5% return, and some require an 8% or 9% return (from direct sales).”
And the other execs echo her sentiment: Twitter just isn’t cut out for producing direct returns on investment.
However, the story notes that non Promoted Tweets were often successful in doing what advertisers set out to do, possibly because, for small businesses, a Promoted Tweet that reaches a broad audience will not be targeted enough, while a free tweet sent just to their followers reaches the right ears.
The second story on Investors.com explains that advertisers haven’t seen consistent return on their Promoted Products, unless it’s used for branding rather than sales.
One advertising exec, Craig MacDonald, explained that his client likely wouldn’t be running a second round of ads on Twitter after the poor performance of their test round:
“The click-through rates were paltry. My sense is they’re going to say ‘our money can be better spent elsewhere.”
To be honest, I’m not surprised that Investor.com found so many execs concerned about Twitter’s viability as an ad platform. Sure, big companies will see their fair share of success on Twitter, but the little guys aren’t making much headway. And I think this stems from the “beta” nature of Twitter’s advertising suite.
As it stands, a Promoted Tweet is shown to anyone who searches for a term or who clicks on a Promoted Trend. This is targeted, a bit, but not enough to really capture high click-through rates – after all, how many times have you clicked on a Promoted Tweet at the top of a trend you clicked on? This would be an issue for smaller businesses who need to see high returns on investment through sales.
But, I think there is some silver lining on this cloud: Twitter is trying – hard – to solve these problems. As mentioned in the beginning of the article, they’ve rolled out geo-targeted ads that will only display to Twitter users who live in a certain county or region, and they’re offering lower cost advertising solutions to try and attract small businesses.
Twitter is well aware of where their advertising weaknesses lie. They aren’t as targeted as Google or Facebook, ads can be quite expensive out of the box, and they have a low user retention rate. But they are addressing these issues one-by-one, and I fully expect to see a revamped, more results-friendly Twitter ad platform in the coming months.