Twitter Sees Sizable Ad Business

Twitter is ready to declare success in its initial revenue-building efforts, and casts an even wider net by launching limited-time deals feed @earlybird, which provides time-sensitive offers from advertisers.
Disney has signed up for the first offer: a two-for-one ticket promotion for The Sorcerer’s Apprentice, which debuts in the U.S. today. The tweet takes users to a Fandango page to purchase the tickets with a discount code.
The @earlybird program is the latest addition to a growing set of revenue makers Twitter is trying. Dick Costolo, Twitter’s chief operating officer, said it would continue to test concepts that can accelerate activity already
happening on the service. Many companies, including deal-of-the-day services Groupon and Gilt Groupe, use Twitter to spread deals.
“There’s going to be lots of iteration and testing,” he said. “So far it’s working.”
The company divides its business into two pillars: advertising and commercial services. Under advertising, Twitter is offering brands both Promoted Tweets, which appear in search results, and Promoted Trends, which are on its home page. @earlybird falls into the commercial sector, which includes business tools.
Coca-Cola reported that it saw 86 million impressions in a day and a 6 percent interaction rate for its Promoted Tweets campaign tied to the World Cup. Those results, Costolo said, are “not atypical” for ad campaigns on Twitter.
“I’m confident the ad platform already works for big brands in terms of the reach and engagement we can provide,” he said.
The key for Twitter’s advertiser approach is finding activities happening on the service and amplifying them, Costolo said. @earlybird, for example, will exist as a regular tweet from Disney’s account. The @earlybird account, which already has 46,000 followers, will retweet the message. Similarly, advertisers can only run a Promoted Trend for something that is already showing momentum on the service. Old Spice, for instance, ran a Promoted Trend yesterday to hype its ad campaign featuring the actor in its “The Man Your Man Could Smell Like” commercials sending videos to well wishers in social media.
“We’re trying to make sure our ad platform is organic to how people are already using Twitter,” he said.
The company has an advantage, according to Costolo, since businesses are already using Twitter and are familiar with its conversational nature.
“If we tried to monetize at day one, you’d see people cutting and pasting their [Google] Adwords ads and getting no followers,” he said.
For now, Twitter is working with a small number of brands. It hopes to ramp up to the “low hundreds” by the end of the year before opening widely to advertisers in 2011, Costolo said.
Twitter is working with national retailers and aggregators (like Groupon and The Gilt Groupe on the @earlybird deals) while hoping later to add regional deals, categories and an option for small retailers. The deals must be exclusive to Twitter and be offered for a limited time, the company said. Twitter will use its ad services to promote its deals. The Sorcerer’s Apprentice, for example, will most likely run as a Promoted Trend.
The hope is that consumers not only act on the deal but spread it further through retweets, said Shiva Rajaraman, a product manager at Twitter in charge of the commerce side of its business. The @earlybird service sprung from behavior Twitter saw on the service, he added. The power of Twitter is quickly spreading news, Rajaraman said, and oftentimes a good deal is news itself.
“There’s a ton of conversation on these deals on Twitter today,” he said.