Having launched a suite of advertising solutions over the past year, Twitter has answered one of the questions that had previously plagued it: will the popular social media hub ever find a business model?
But now that advertisers are using Twitter to promote themselves and their products to its audience, there's a new and even more important questions: is it delivering a return? According to some reports, the answer is in many cases a resounding 'no.'
As detailed by Lauren Dugan of MediaBistro's AllTwitter blog, two articles on Investors.com have called into question the efficacy of Twitter ads.
In one of the Investors.com articles, several digital marketers spoke out about Twitter as an ad platform, and they didn't express much enthusiasm. "It's more about image and branding," one said.
Another bluntly stated, "Our clients are very (return on investment)-focused. We're not that excited about Twitter as an ad network." The message: Twitter ads don't make any sense unless you're a big brand.
In the other Investors.com article, Craig Macdonald, the CMO of digital marketing services provider Covario revealed that one of his consumer electronics clients saw mediocre ("so-so") results from its Twitter ads:
It doesn't seem that great a deal for the advertiser. (Our client) is doing this for the experience, to be part of this cool new thing and so they can say they did it. But the business results are not there yet.
Another digital marketing firm, MoreVisibility, tells a similar story. Danielle Leitch, EVP of Client Strategy for MoreVisibility, told Investors.com that "the click-through rates were paltry" for its clients' Promoted Tweets.
Google and even Facebook (which is not known for knock-your-socks-off CTRs) were far more effective at generating ROI, she said.
So is Twitter's advertising-based business model destined to fail? Certainly, its prospects don't look great long-term.
While big brands can afford to spend money on ineffective Twitter campaigns and justify it based on the site's popularity, it won't be the 'hot new thing' forever.
If Twitter wants marketers to grow their ad spend, it will eventually have to deliver effective campaigns that can scale. Right now, there's reason to be skeptical about its ability to do this.
Ironically, the nature of Twitter is part of the reason. Currently, most of the 'advertising' taking place on the site isn't going through its ad offerings. With no payment, just about any company can use Twitter as a promotional tool. Many, of course, are doing just that.
While there is a very real cost associated with this, it seems that most companies, particularly smaller and mid-sized businesses, are more likely to expect a higher return from their own Twitter efforts than Twitter's paid ad solutions. If current advertiser experiences are any indication, they just might be right.
Reader comments (12)
1:11PM on 18th May 2011
When will brands realise that social networks work to engage worth sisters consumers, not advertise to them?
4:20PM on 18th May 2011
Ads on Twitter do not appear as ads, they are embedded in the idea behind the Tweet via bloggers and others with high prominence in social media. Bloggers and social media elite can sell exposure to their fan base.
Twitter will need a different strategy to monetize, perhaps their recent purchase of Tweet Deck will move them into a paid feature offering.
Director of Search at Clubnet Search Marketing
4:43PM on 18th May 2011
I never thought the Promoted Tweets would generate a great ROI but good to read others experience on the advertising model.
I would have expected it to be more effective for larger, recognised brands that can run promotions, sweepstakes and competitions. Sign-ups and subscribers to be more collectable via this channel rather than sales so to speak.
6:59PM on 18th May 2011
Why is this surprising to anyone? Twitter should be looking at contextual ads, paid tweets from influencers, etc. Sure, that is more work and it doesn't scale as easily but anything that is being promoted in social networks should work as a natural part of a conversation. People just don't see ads anymore, which is why social networks gained popularity. It is an (or used to be) an oasis where you would not be screamed at to buy crap all the time.
I know Twitter needs to make money to stay around for us to be about to chat in their bar, but traditional ads just won't work. And I'm not sure any brand wants to put in the effort to become contextual enough to make ad-conversation actually work... so, twitter will eventually die for lack of revenue.
9:06PM on 18th May 2011
I explain to my clients that Twitter is used more for engaging your existing customers and increasing your digital footprint.
They should not expect to blast Twitter with "visit my site" or other lame Tweets and expect people to respond.
Rather they should simply talk to people! Just talk and eventually you will see the increase in followers by just "being real"!
9:15PM on 18th May 2011
That's interesting. I bet a lot of investors are going to be pissed if they can't get that to work.
Someone should call me, I do have an answer. To bad I'm just a small fry.
4:42AM on 19th May 2011
Twitter itself is very high targeted social media platform, why should I go to advertise when I can get high targeted traffic?
8:28AM on 19th May 2011
that is more work and it doesn't scale as easily but anything that is being promoted in social networks should work as a natural part of a conversation. People just don't see ads anymore, which is why social networks gained popularity.
Founder at McCormack Morrison
1:57PM on 19th May 2011
Problem is with comparing social networks to Google and affiliates is that it will always perform poorly. Same reason Facebook has made the decision to block their ad network results being compared to Google.
Ad words is a direct answer to a need, it delivers sales when people want to buy, social is just an advertising channel and needs treating as such.
The reality is we need DR and brand channels, the problem with Twitter it really isn't either.
Digital Marketing Specialist at McLoughlin Promotions
2:20PM on 19th May 2011
Twitter isn't a place where you can expect to get much traffic- it's more about converting your followers.
6:01PM on 19th May 2011
Twitter should not be all about advertising revenue. Like all good idea's the marketing person will always find a way or use for it. But surely twitter can think of other ways to generate revenue than plain old advertising!!
8:38PM on 20th May 2011
I'm with everyone else. This is no surprise. I rarely (if ever) even see an ad on Twitter, so how can they be making money?
I think Twitter is suited more to a non-profit kind of model. Their product is now integral to how people change their governments, after all. It's practically a public service. Either that or merely offer businesses perqs for upgrading their profiles. I now I'd love to access Twitter stats right on the website.
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