Social Media

Twitter to Advertisers: You Really Need Us


Twitter to Advertisers: You Really Need Us

Photograph by Corbis

Welcome to Twitter’s build-up-to-an-initial public offering hype period, the opposite of those quiet periods enforced by the SEC. If you are an advertiser, the social media company has one message it wants to make loud and clear: Start taking Twitter seriously.

A study released on Thursday—commissioned by Twitter itself from the research firm Datalogix—found that companies busily tweeting end up selling more stuff than those that don’t. A second conclusion: Paying for sponsored tweets leads to even more sales than simply engaging in the unpaid side of the social network. The study tracked the offline buying purchases of Twitter users who came across a given company’s activities via social media.

People who saw a company’s tweets spent 8 percent more money on its products than those who didn’t, according to the study, in what is a rather unsurprising finding. The easiest way to see anyone’s tweets, after all, is to follow that person or brand on Twitter—and anyone following a company or otherwise interacting with its social-media messages will obviously be more inclined to make a purchase. People who responded to sponsored tweets from companies—the kind you pay Twitter to place in the feeds of nonfollowers—were good for an additional 12 percent in sales volume. This could easily be a case of correlation posing as causation.

But Datalogix also recorded a two percent increase in sales activity among those who simply saw promoted tweets without bothering to interact with them, suggesting that Twitter’s paid messages do work as advertising. By most accounts, less than 1 percent of people even click on websites’ banner ads. Promoted tweets proved particularly effective at convincing people who already follow the company on Twitter to buy things: Followers who came across promoted tweets were 29 percent more likely to make a purchase than followers who didn’t come across those paid messages. Twitter said it would be able to measure the impact of ads for businesses in the future.

Earlier this week, Nielsen (NLSN) released a report showing that higher activity level on Twitter increases ratings on television 29 percent of the time. This is good news for Twitter, which has been making an increasing push into television advertising. Unsurprisingly, TV-ratings gains also led to more tweeting almost half of the time, which must provide some satisfaction to television executives at a time when there are questions as to whether people want to watch anything but sports in real time.

The cheerful stats come at a convenient moment for Twitter as it prepares to face questions from Wall street investors ahead of an expected IPO. Social media companies don’t have a great track record at managing these preludes. Just days before Facebook (FB) went public, General Motors (GM) deciding to stop paying the site for advertising while making it known that it saw little benefit to paying for sponsored posts. It took more than a year—and dramatic improvements in its mobile performance—to bring Facebook shares above the IPO price for the first time, earlier this month.

Twitter is shaping up to be in a better spot for its share launch. According to EMarketer, the company will bring in almost $1 billion in 201, with over half its advertising revenue already coming from mobile. There’s also growing evidence that activity on the social network actually changes what happens in the real world.

Brustein is a writer for Businessweek.com in New York.

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Companies Mentioned

  • NLSN
    (Nielsen NV)
    • $43.94 USD
    • 0.45
    • 1.02%
  • FB
    (Facebook Inc)
    • $75.85 USD
    • 1.16
    • 1.53%
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