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Twitter IPO and Advertising… A Risky Gamble?

By Joy Baer September 20, 2013 | 10:18am

 

The frenzy towards a Twitter IPO builds, but what does it really mean in our industry? For advertisers, it could be substantial. Not necessarily because of the IPO, but because of the fact they have acquired MoPub. If you aren’t familiar, MoPub is a mobile ad exchange platform that touts on its website to be the “world’s largest mobile exchange”. 

Twitter is banking on the hope that this acquisition will be a huge boost to building and sustaining advertising (and making the IPO status worth it). This is just one of many acquisitions Twitter has made this year including Bluefin Labs (analytics company), We are Hunted (music search), Ubalo (coding firm) and Markana (tech-trainer). All these pieces are clearly part of Twitter’s plan to be attractive and accessible to advertisers in the social media space. 

That could be a tall order. We see in our STRATA systems that Twitter is trailing Facebook by quite a margin for advertisers. This year, for every dollar spent on Facebook, only $0.33 was spent on Twitter. So Twitter needs to find a way to be more relevant and accessible to advertisers, thus – their move to buy up these companies.

The thing is - all of the acquisitions I’ve mentioned still may not be enough. In our STRATA Survey of leading advertising agencies, Twitter ranks third behind Facebook and YouTube for client campaigns. And the margin isn’t small. 90% of agencies use Facebook in its campaigns, while only 53% use Twitter. 

At the start of the year, only 20% of our agencies reported that they see a better ROI on paid social than free. What I’m saying is that there will be an uphill battle for Twitter to meet the expectations of the IPO, but they are rolling the dice and the $350 million investment in MoPub could be the game changer they are hoping for in the short term. The biggest challenge may be finding a way to not only attract media buyers to the platform, but to change the mindset and have them actually PAY to be on it.

 

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