Twitter Ads Ain’t Doing It for SMBs

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ADOTAS – Twitter President of Revenue Adam Bain noted at the Ad Age Digital conference in April that 80% of Twitter’s 600 advertisers were repeat customers — and some of the names are pretty impressive: McDonalds, Starbucks, Verizon…

But 600? That’s it?

Strangely enough, the microblogger gets repeat business from major companies such as McDonald’s because advertisers are finding it to be great for branding — but as Facebook and Google will tell you, it’s the multitudes of smaller, local advertisers that will continue driving online ad revenue.

Except those may be Twitter’s non-repeat customers, as Investors.com had not one but two stories suggesting smaller advertisers have not been impressed with Twitter products. The main complaint? Lack of ROI.

The money quote comes from Hillary Bresser of .Com Marketing: “For a lot of small and medium-size businesses, if they spend $10,000 to $30,000 on a campaign they need to see a 4% to 5% return, and some require an 8% or 9% return (from direct sales).”

That sounds pretty reasonable — perhaps the recent addition of geotargeting will bring back some of these scorned SMBs to Twitter’s ad products. Also, the company is introducing a “Beta Partnership Plan” tailored toward SMBs that would require a (negotiable) $15,000 minimum spend over three months.

I’ve been noting recently that Twitter’s revenue prospects aren’t very promising, especially considering the microblogger’s massive valuation. While geotargeting and SMB advertising plans are a start, Twitter really needs to figure out a way to bring in the local dollars — it could completely change the company’s revenue outlook.

5 COMMENTS

  1. Twitter CPM deals simply won’t cut it. It’s like Yahoo trying to get $25K to start your CPM deal in 1998 when everyone really was looking for CPC or CPA traffic.

    Just how many of the millions of tweets that go by have anything worth noticing? Unless you’re searching out vertical content, sponsored messages are cat litter.

  2. Wow…$15,000 minimum spend? I’m no Twitter expert, but that’s a lot of scratch for most SMBs. When considering most web services (and this includes advertising), up-front minimums (and sometimes any cost greater than zero) really turn people off. In a world where services (including Twitter) give themselves away for free, asking SMBs to front $15,000 for a completely unproven ad technology strikes me as ludicrous and somewhat desperate. It also strikes me as utterly incongruous with Twitter’s core philosophy of boiling the world down to short, bite-sized chunks. $15,000 is by no means bite-sized.

  3. It’s time for Twitter to explore other options to monetize their product while still providing value to their users. Here’s an idea – partner with Google to use their geographic targeting to serve up location based deals to Twitter users. The ads could appear instream or, preferrably, on their own tab.

    Twitter can guarantee high adoption from local businesses by charging nothing to show the deals, instead splitting the revenue generated during the sale 50/50. The platform has to be flexible enough to allow businesses to create,pause, delete, and activate their offers right from their UI. The partnership with Google could also include a percentage of Google’s own local deal ads getting exposure across the platform as an additional incentive to make it happen.

    This would make Twitter a serious player in the white hot “deals” vertical, and be a win-win-win for Twitter, Google, and consumers.

  4. Twitter and real time stream/update networks (the social stream) are great for mid to upper funner brand awareness and engagement campaigns. Super high engagement rates vs. web banners. Social/earned media bonus. But to think that SMB like Joe’s Radiator in San Francisco for example is going to see ROI vs. search is kooky. The reach/scale is not there, and consumers don’t use Twitter or Facebook/etc. to find a radiator repair shop. We learned all this a couple years ago at 140 Proof (my company), and are focused on what works vs. ‘what valley wants’ (i.e. another long tail/self-serve/crazy margin business like Google, Facebook, Groupon, etc.). Maybe Twitter does crack the code on that, I don’t see it.

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