Twitter Opens Ad Demand Floodgates With Self-Serve Expansion

No change in frequency of ads served, says exec

Twitter extended its self-serve platform to all U.S. users today, opening up the demand floodgates even more than when it rolled out an ad API earlier this year. Conceivably accommodating that swell of advertisers would lead to more Promoted Tweets appearing in users’ streams, but Twitter says that’s not going to happen.

“There will be no change in the frequency with which ads show up in timelines or [on Twitter’s search results pages],” said Russ Laraway, senior director of small- and medium-sized businesses at Twitter. “Our advertisers, as they come in, will participate in real-time auctions exactly the same as other advertisers working on the platform.”

Laraway would only say that “thousands of advertisers” are using the self-serve platform to date, but Twitter counts 4.5 million businesses using its platform for some commercial purpose, paid or unpaid. Assuming that the share of those businesses that also advertise on Twitter rises in the wake of the self-serve expansion—especially once the expansion goes international, which Laraway said the company is “looking hard at”—something will have to give. Whether it will be Twitter boosting supply or advertisers or their budgets remains to be seen.

Since Twitter’s ad platform operates on an auction-based model a la Google’s AdWords—and since the laws of supply and demand dictate that if demand increases but supply hold steady, then price increases—Twitter’s ad rates should trend upward. A former AdSense sales and service exec at Google, Laraway said “there will be no direct effect on the cost of advertising” because pricing is dependent on the specific bids placed in auction. But again, with more bids being placed in a given auction, those bids will likely need to be bigger to win an auction. Or advertisers will need to get more creative with the audiences they target with their bids, making them more defined and relevant and taking advantage of Twitter’s all-important rule (if an ad doesn’t perform, it gets pulled) in order to win their audience.

“The key insight is that we know how the competition tends to work. It’s some function of the bid and some function of whether it’s a good ad,” Laraway said, pointing to Twitter’s stat that its ads on average notch 1 to 3 percent engagement rates.

While self-service advertisers can take advantage of Twitter’s bevy of targeting options—targeting by interest, keyword, device, gender and geolocation—the location-targeting capabilities may leave some local marketers wanting. For example, a burrito stand by the beach in Santa Monica can’t limit its campaign’s parameters to users in Santa Monica or even the corresponding zip code, so it’s left to target the Los Angeles metro area and triangulate from their by adding interest targets such as users interested in surfing and bodyboarding or keyword targets such as “Santa Monica,” “burrito” and “beach” (interest targeting and keyword targeting can’t be combined via the self-serve tool).

Local advertisers are widely credited with knowing their customers well and being able to compile specific ad targets, but concocting a proper targeting formula can be complicated, especially when specific to a platform like Twitter that has brands bid based on engagement metrics like users clicking, retweeting, replying or favoriting a Promoted Tweet. To that end Twitter recently redesigned its subdomain for businesses to include videos and case studies to help advertisers wrap their heads around its ad platform.

Additionally Twitter could apply its teachings within the campaign creation process by presenting suggested targets to advertisers based on information like their followers’ interests, previous campaigns and campaigns run by similar businesses. For example, it might be able to tell that Santa Monica burrito stand to target men on BlackBerrys because other mexican food merchants have seen successes with that audience. That’s not yet a feature of the platform, but Laraway said it could be added if a lot of advertisers begin to ask for it.


Recommended articles