ONLINE MARKETING

Twitter's IPO: What Marketers Need to Know

Thinking of advertising on Twitter? Better grab a copy of the company's S-1 IPO filing and read the fine print.
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Twitter seems like a potentially strong advertising medium, and that's important to entrepreneurs in all industries. But as Facebook has shown, the hot new venue doesn't necessarily work for everyone, and there may be inherent issues that can cause problems for advertisers.

What would be great is more information than a company's own marketing or whatever might get picked up in the press. Luckily, Twitter has filed for its IPO, which means a lot of financial information and other insight is suddenly public knowledge. Here's some of what you'll want to know before signing an advertising contract.

How important is mobile to you today?

Twitter is becoming extremely dependent on mobile. About 75 percent of its users any month get onto the service from a mobile device. Of course, they may be using desktops or laptops with browsers as well. But the telling figure is that more than 65 percent of the company's advertising revenue comes from mobile.

From a pragmatic marketing view, that's not necessarily good or bad. The question is how you interact with your customers and prospects and how they interact with technology. If your target market is highly wired younger people who might as well have a smartphone or tablet surgically attached to one hand, then Twitter has something going for it.

However, if you are trying to reach people who are just as likely, or more so, to use a desktop or laptop, you've got a bit of a problem. You could end up effectively paying for ad impressions skewed toward mobile and away from a good portion of the people you want to reach.

Not all the marketing choices work well on mobile

Another implication of the mobile popularity is that there may be Twitter marketing programs that are less useful to you. Two of the company's big marketing options--promoted trends and promoted accounts--"receive less prominence" than on browser versions of Twitter. You might want to focus on promoted tweets, instead, which show up the same way on mobile.

Do your people use Twitter?

Twitter has about 215 million users each month, but that doesn't approach the perceived ubiquitous nature of a Facebook or Google. If you've got a largely U.S. audience, for example, then you need to know that in the second quarter of 2013, 77 percent of Twitter's monthly average users (MAUs) came from elsewhere. That still leaves about 50 million users in the U.S., which is a big number, but hardly universal. Furthermore, Twitter says that its big growth is likely to come from other countries. If you market globally, you might consider when is the proper time to begin a campaign because you want enough of an audience.

What are you paying for?

You can tell a lot about how a company thinks and acts from the metrics it uses. Among other things, Twitter puts heavy emphasis on what it calls timeline views. What is ultimately important is not just how many people use the service, but how often all those people collectively look at it. That's how Twitter measures ad revenue, for example--by the amount per thousand timeline views.

That doesn't tell you a thing about how the timeline views, which include every user refresh and search, are distributed. Could you could end up paying multiple times for users who see refreshed versions of the same ads, thereby wasting some of your ad budget?

There are no smoking guns, but there is enough information to suggest that instead of assuming that Twitter will bring you business, you should go through the S-1 filed with the SEC yourself. See what information about demographics, operations, and strategy could influence your marketing decisions.

IMAGE: foldsomething/Flickr
Last updated: Oct 4, 2013

ERIK SHERMAN | Columnist

Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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