Twitter Prepping Bigger Ad Play

Ad API to roll out this quarter, sources confirm

Twitter is about to take advertising on its platform up several notches. That could mean tons more revenue for the social networking giant. But it could also threaten Twitter's delicate ad balance with its users.

The company is readying its ad API to launch this quarter. That product would enable brands to run ads on the social network as easily as they do on Facebook (i.e. a lot of different ads at once in a more sophisticated, automated fashion), according to several sources with knowledge of the platform. TechCrunch first reported the news two weeks ago. A Twitter spokesperson said the company has nothing to announce.

Twitter has been briefing agency execs and social ad firms on the ad API, including a number of Facebook Preferred Marketing Developers, though not all companies participating in those discussions have chosen to integrate Twitter’s API at launch.

“I can say on the record, we have been chatting to Twitter on and off about their ads API since 2011,” emailed Rob Leathern, CEO of Optimal Social, one of Facebook’s Preferred Marketing Developers. Leathern didn’t specify whether Optimal had signed on for the API’s launch, but pointed to Optimal’s Twitter analytics tools and a customer base “eager to have a single buying and analytics platform to access multiple social networks.”

An ad API could exponentially increase Twitter’s ad revenues, particularly important if Twitter is planning to go public later this year or early next as has been reported. It would make it easier for advertisers to run ads on Twitter and target as well as scale their campaigns. That would open Twitter up to a flood of new advertisers and new money from existing advertisers.

The year after Facebook began testing its ad API with a few companies in 2009, the social network saw a 145 percent increase in ad revenue to $1.87 billion. Facebook officially released the API the following year and closed 2011 with $3.15 billion in ad revenue. That’s not all credited directly to the API, but one source said Facebook makes twice the ad revenue from its API as from direct sales. Twitter seems very serious about an ad API’s potential. Mention of the ad API “is plastered over every single whiteboard in Twitter HQ,” said one source.

While the ad API could be applied to Twitter’s various Promoted Products, such as Promoted Trends and Promoted Accounts, sources said it would be based around Promoted Tweets, at least initially.

An ad API could be a double-edged sword for Twitter. The company has been extremely careful in limiting ads running in users’ streams and ensuring those displayed generate positive feedback from users—or they risk getting pulled. By opening up the demand floodgates, Twitter could dilute the quality of users’ streams were it to increase the frequency of ads shown, generating a situation akin to an online advertising landscape so rife with display ads as to weaken performance numbers and engender banner blindness.

Twitter has a couple options to make sure the flood of demand doesn’t drown users. It could do something drastic like implement an EdgeRank-like algorithm as Facebook has done, which organizes tweets according to engagement metrics rather than displaying them all in reverse-chronological order. Or it could find a happy medium by siphoning some Promoted Tweets to the Discover tab, which serves as a curated version of a user’s regular stream and underwent a mobile redesign last week that makes it even more apt for advertisers.

Traditionally the Discover tab in Twitter’s mobile apps separated different types into their own modules, one for tweets, one for trends, etc. But last week Twitter changed the layout in its mobile apps, so that the Discover tabs functions as a horizontal stream, headlined with a trends list followed by the curated tweets interspersed with suggestions of who to follow. The tab already features Promoted Trends and Promoted Accounts, but not Promoted Tweets even though that product may be even more at home in a feed more organized around popularity and relevance than chronology, similar to Facebook’s News Feed.

The new Discover tab could also be Twitter’s gateway to more mainstream users who struggle to keep up with the real-time stream and may be more amenable to intermittent advertisements than power users who rely on Twitter for their real-time news. Advertisers would certainly welcome that expanded, potentially more tolerant user base.

However sources said not much will change with how Twitter distributes Promoted Tweets to the regular stream. Others concurred. “They have a strong heritage as an organization in making sure the [stream] is hallowed ground,” said Jordan Bitterman, svp and North American head of social-mobile-local content at Digitas. “Even when they started putting ads into the feed, they did that deliberately and slowly and constantly monitoring the response they were getting from the marketplace. With any potential API platform, I don’t believe that will change at all.”

Instead Twitter would intend for its API partners to build tools taking advantage of the platform’s targeting options. In addition to targeting users by standard parameters like location, last summer Twitter added the ability to target audiences by interests, taking into consideration who they follow and what they tweet about. A brand like Coke, hypothetically, could create one Promoted Tweet campaign targeted to Millennials, then another geared at moms. That might sound like a creative, but then consider the content is limited to 140 characters, including a picture, video or link.

“It’s very difficult for us to throw a bunch of different creative and targeting in one fell swoop [on Twitter]. We can’t batch [campaigns] like on Facebook,” said Chris Tuff, svp and director of earned and emerging media at 22squared.  “On Facebook we’re doing however many combinations and targeting where we end up with super efficient [key performance indicators] because we’re able to do it on a large scale. [A Twitter ad API] would allow that.”

Twitter is the last of the major social networks to run ads without an ad API. Facebook was the first, followed by LinkedIn last November. Other social networks such as Google+ and Pinterest do not currently feature ads.

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