Stay on Top of Enterprise Technology Trends
Get updates impacting your industry from our GigaOm Research Community
It’s no secret that mobile advertising is the holy grail that virtually every major digital player is trying to find, but no one seems to have cracked the code just yet. Facebook (s fb) has admitted that while it has almost half a billion users on mobile devices, it still isn’t sure whether its mobile business is working or not, and Google (s goog) hasn’t blown anyone away with its results so far either. According to some reports, however, one company that is having some success is Twitter — which now sees a majority of its advertising revenue coming from mobile. Is there something about Twitter that makes it more likely to succeed at mobile advertising than its larger competitors?
The fact that Twitter’s mobile advertising accounts for more revenue than its website (which it has said before) is surprising in part because the company has only been offering mobile ads — including promoted tweets, promoted trends and other formats — since earlier this year, while advertising on the website version of the service has been available for much longer. But a majority of Twitter’s usage (about 60 percent or so, according to the company) also comes from mobile devices and apps, so it makes sense that this would become a big part of the advertising model as well.
A million people engaging with an ad in four days
A Wall Street Journal story shows that Twitter may be succeeding at something that both Google and Facebook continue to struggle with, and also that it actually has a growing business model that might justify its multibillion-dollar market value. It should also be noted that the piece focuses primarily on the experience of a single company: namely, Chinese-food chain P.F. Chang’s.
But what is interesting is that the company doesn’t just say that the ads it placed were effective — an executive with the chain says the results were “staggering.” Chang’s paid $25,000 to promote its offerings to people who were searching for or interested in terms like “Chinese New Year,” and targeted both mobile and desktop users. In just four days, about one million people clicked on a promoted tweet from the chain, retweeted it or otherwise interacted with it — and about 70 percent of those people did so from mobile devices.
The Chinese-food chain isn’t the only one the Journal mentions: software company CloudOn Inc. also says it has had success with a Twitter ad campaign, generating close to 10,000 downloads of its iPad software. The company said it saw 2.5 downloads for every 100 ad impressions — which it said was three times the download rate of an ad on Twitter.com, and much better than other advertising services (although the story doesn’t say which ones it was comparing this to).
Anecdotal data from two small companies isn’t much evidence to go on when it comes to Twitter’s likelihood of success with mobile ads, but then the company hasn’t been in the business very long either. And more than one advertiser is going to perk up when they see that a retailer had over a million people click on or otherwise engage with a promoted tweet in just four days of a campaign — anyway you look at it, that’s a pretty impressive result. One of the things that’s interesting about Chang’s experience is that other campaigns didn’t work as well. Was there something about the Chinese New Year campaign that made it work better?
Could Twitter be a superior mobile ad medium?
As the Chang’s executive mentions in the Journal story, it’s possible that having a message that is targeted to a very specific event is better than a broad sales pitch for a service. One thing Twitter has going for it is that large numbers of people see it as a mobile information network with real-time content about interesting topics — both news and entertainment related. If a tweet like Chang’s is targeted to an event people are reading about in their Twitter stream, it makes sense that it would get a lot of engagement, and that is clearly what Twitter is counting on.
It is still early days in the mobile advertising market, with mobile ads making up only about 5 percent of all ad spending. But as former internet analyst Mary Meeker noted in a recent presentation, the gap between the amount of time people spend on mobile devices vs. the amount of money advertisers spend there has to close eventually, and that is a massive opportunity — internet users spend about 10 percent of their time on their mobile devices. And both Google and Facebook have their sights set on dominating that market.
Could Twitter as a mobile advertising medium be fundamentally superior to Google or Facebook? The service is arguably far more efficient as a mobile content-consumption platform than anything that the other two web giants have been able to come up with. And Twitter also has the potential to be better at targeting around specific events or locations than either Google or Facebook, which could give it an edge as the market grows. One thing seems obvious: the mobile advertising race is just starting to heat up, and the early signs are that Twitter could turn out to be a strong contender.