3 Key Questions About Twitter’s Ads Before the IPO

A slew of marketing experts weigh in

Headshot of Christopher Heine

Can Twitter's mobile ads explode and become a revenue bedrock like they have with Facebook?

Will Twitter ever attract Facebook's herd of direct-response marketers and local businesses?

Should Twitter roll out a dedicated video advertising product—a more intrusive, pure video ad treatment that brands would pay a premium for, rather than simply embedding YouTube spots into a Promoted Tweet?

We asked a handful of digital advertising observers those three questions the day after Twitter revealed its plans for an initial public offering. Research firm eMarketer predicts that the social media platform will pull at least $291 million in mobile ad revenue this year—or more than half of its total ad sales. To compare, Facebook drew $660 million in mobile ads during its second quarter alone this year.

Is it fair to compare 6-year-old Twitter to 9-year-old Facebook? Maybe. Maybe not. But one thing's for sure—Wall Street doesn't put much stock in fair.

Here's a virtual roundtable discussing a trio of intriguing questions:

1. Whether it's a good thing or a bad thing, Facebook's ads seem more visually present during the mobile app experience than Twitter's. Can Twitter's mobile ads become a revenue bedrock like they have with Facebook?

Darren Herman, chief digital media officer, The Media Kitchen: I certainly recognize the mobile ads in the Facebook app. But with Twitter, the ads are not always present. Or when they are, they blend in. As an advertiser, one would think this would worry many. But in fact, I think it's better—more native advertising units that blend in are better for the marketer.

David Rogers, executive director of BRITE (brands, innovation, technology) at Columbia Business School: [Twitter's mobile ads] need to be self-service, to the degree that Google AdWords is—something that small businesses can do themselves, and do use themselves. The recent MoPub acquisition should help with this a great deal.

Twitter also needs to keep providing more and better data to advertisers, so they can really understand who is seeing and who is interacting with their ads. The MoPub acquisition will also get Twitter into selling ads on other mobile apps—which could make Twitter a sort of "one-stop-shop" for media buying on mobile devices. I think Twitter’s key goal now is to increase the volume of ads they are showing, while at the same time making sure their targeting is of maximum value to advertisers, their engagement rates stay high … and that the increase in ads does not tip too far and ruin the user experience. That’s a tricky balance, which is why I think it is good that Twitter has increased the ad volume much more gradually than Facebook has post-IPO.

Ken Wisnefski, CEO of WebiMax: Twitter definitively needs to integrate more mobile ads into their process. They have rolled out aspects, but they have not taken full hold. Facebook's mobile success likely ties in to Twitter's decision to move forward with the IPO. Remember, Facebook for the longest time spoke of their "mobile advertising," but it took a while for it to take hold. Twitter will have to follow the same path.

Erich Joachimsthaler, CEO of Vivaldi Partners Group: Twitter needs to do much better than Facebook. Facebook [mobile] ads are too much in your face, and their analytics suck.

Ryan Cohn, vp of social/digital, Sachs Media Group: One of the biggest differences between Facebook and Twitter is that Facebook is more focused on visual imagery, while Twitter is predominantly text-centric. Twitter's lack of in-your-face images may stifle creative ad production and become a major roadblock for the social network's ad revenue growth.

2. Will Twitter attract Facebook's herd of direct-response marketers and local business advertisers?

Cohn from Sachs: Twitter must add a retargeting product in order to encourage direct-response marketers to shift ad budgets away from Facebook.

Joachimsthaler from Vivaldi: Really depends on whether Twitter … really allows the direct marketer to track ad conversion data, like Facebook now with Facebook pixels. Without the ability to track conversion down the funnel, direct-response ads on Twitter are just more clutter. The proof is not in the pudding, it is in the eating it, and for direct-response marketers this means, conversions, clickthrough rates and cost-per-click.

Rogers from Columbia: For Twitter, I don't think direct response as a sale will be the key advertising value. Users are not mostly on Twitter to shop. It is maybe the opposite of Pinterest in that way. But Twitter is much better suited than Facebook for brands to actually interact with consumers. On Facebook, you go there to interact with friends, so brands in your timeline will always feel a bit like party crashers, advertising as interruption. But on Twitter, most users are following a mix of friends, celebrities, news outlets, companies, whatever they admire or are interested in. So it's a medium that's well-suited to a kind of advertising that's about conversation, discovery, sharing and interaction.

Twitter ads can be direct response, but that will likely be further up the purchase funnel. Click to read, click to watch, click for an experience—something that builds a relationship with the customer and encourages them to share it with others. By driving the click, you can get them onto your brand site, maybe gather some more data, like an email address. But Twitter is mostly not a sales medium. That's been demonstrated by the data on sources of referral traffic to e-commerce sites from social networks.

Herman from Media Kitchen: Using Twitter as a direct-response medium would be missing the point, but it can be done. In 2009, we did one of the first ever sponsored tweets, and it performed unbelievably well from a direct-response perspective. Since, Twitter has released its [lead-generation] cards and email capture which can be used as a direct-response offering. While I think Twitter can be a sale/response driving vehicle, it's missing the point of the larger use of it which can totally change the way brands communicate.

Wisnefski from WebiMax: I think [direct-response clients] are important, but I think the nature of Twitter likely is more geared for branding than direct response. If you look at its whole platform of "short" messages … it precludes the notion that people view this on the fly. Branding efforts would seem to hold more value than direct response just do to the type of user experience Twitter offers compared to Facebook.

3. Should Twitter roll out a dedicated video advertising product?

Herman from Media Kitchen: With so many ad dollars locked up in sight/sound/motion—i.e. video, Twitter would be amiss to neglect this format. They are moving into the space already and have been teasing how they show video within the Twitter feed. Startups like Sachand SnappyTV are potentially the future of how Twitter looks at the space.

Joachimsthaler from Vivaldi: They are doing already with Vine. Think, for example, the Honda Summer Clearance event with live Vine videos encouraging people to trade in cars.

Rogers from Columbia: It should be Vine. I think it is very smart that they have not integrated Vine yet. Vine is still growing, and they need to let the users figure out what it will be. … But brands are already on Vine. My middle schooler loves Vine. Once the community is a bit more established, and use cases are clearer, Vine will be the video platform that gets integrated into Twitter and incorporates video ads.

Wisnefski from WebiMax: Video ads are becoming more and more viable. But again, I feel for Twitter, [as it offers] less value because of the engagement that users have with Twitter. I am certain Twitter will roll out various revenue channels. But in my eyes, the video ad product for Twitter would not be a great fit for advertisers.

Cohn from Sachs: As smartphones and mobile connectivity improves, Twitter would be wise to roll out a video advertising product. Twitter has seen great success through its acquisition and development of Vine. Better integration of Vine videos into the Twitter feed and then monetization of Vine with a new video advertising product is a natural next step for the social network's growth.

@Chris_Heine Christopher Heine is a New York-based editor and writer.