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Twitter props up direct response business with Google deal, acquisition


Twitter, which is pushing for direct-response ads measured by clicks, leads or sales, said in its first-quarter earnings release that it partnered with DoubleClick to improve ad performance measurement and attribution for direct response marketers, and agreed to acquire retargeting-services provider TellApart for an undisclosed sum. Twitter sees going after direct-response ads, which represent most online ad spending, as a way to offset falling ad rates and slowing growth.

?To deliver increased value at scale, we remain focused on providing improved targeting, measurement and creative for direct response advertisers,? Anthony Noto, Twitter?s chief financial officer, said in a conference call to discuss the results. ?We are still in the very early stages of development for direct response products as most of them have been available less than one year.

?As often is the case with big products, we have a great deal of iterating and fine-tuning to do as we scale in order to maximize the effectiveness of these products in our complex marketplaces,? he said.
 
Buying centrally
Under the Google partnership, Twitter will make its inventory available through the DoubleClick Bid Manager, making it easier for clients who prefer to centralize their buying to create and manage campaigns on Twitter.

Google DoubleClick promotion.

For years, advertisers have typically used Twitter?s promoted tweets, trends and accounts to generate brand or event awareness. By emphasizing direct response ads, Twitter now is saying its ads also can be used for highly targeted campaigns in which an ability to drive revenue outweighs merely piling up retweets and favorites.

Adding TellApart to its ranks will increase Twitter?s ability to help performance advertisers reach users wherever they are, whether on desktop or mobile, the executives said. TellApart?s specialty is driving cost-effective return on investment through dynamic product ads and email marketing for clients such as Neiman Marcus, Pottery Barn, Sur la Table and Wayfair.

?Direct response advertising has been a major growth engine for our ads business over the last several quarters,? Kevin Weil, Twitter?s senior vice president of product, wrote on the company?s blog. ?We?re confident that TellApart will accelerate that trajectory further.?

Amid the weak direct-response results, Twitter, which has searched for a reliable revenue model, cut its full-year sales forecast.
 
Revenue in the quarter rose 74 percent from a year ago to a lower-than-expected $436 million. Excluding the impact of the stronger dollar, which makes money earned overseas worth less when translated back into dollars, revenue would have increased 80 percent.

Ad revenue jumped 72 percent to $388 million. Mobile ad revenue accounted for 89 percent of total ad revenue.

The net loss widened to 25 cents a share, from 23 cents. Excluding stock plan costs and other expenses, Twitter would have earned seven cents a share, above analysts? average estimate for 4 cents. 

Twitter had 302 million monthly active users in the quarter, up 18 percent, with average mobile MAUs accounting for about 80 percent of the total.

Twitter?s results were leaked before the stock market closed, causing its shares to fall 18 percent as the market digested the revenue miss and lowered revenue outlook.

?Successful public companies find innovation and areas for new growth by expanding their portfolio of capabilities,? said Sami Kaipa, co-founder of Glimpzit. 

?Facebook, for example, is not just your grandparents? social network anymore ? it?s a set of mobile app dev tools (Snaptu/Parse), a photo sharing platform (Instagram), mobile IM (WhatsApp), and virtual reality (Oculus), amongst other things. 

To sustain quarterly growth, Twitter must follow suit.

?The company's current valuation puts a lot of pressure on the company to achieve revenue and user growth,? said Christian Brucculeri, CEO of Snaps. ?At some point it won't be surprising for them to hit some speed bumps in their stock price, simply because those expectations are so high.? 
 
Market share
Twitter?s market share is the smallest of the top five social media sites, implying it needs to do better.

TellApart mobile Web page.

?Marketers are efficient on Google?s ad platforms and are looking to shift spending to other options,? said Ken Wisnefski, founder-CEO of WebiMax. 

?First up is obviously Facebook, but marketers are also looking at search engines Yahoo and Bing now.  Pinterest, Instagram, and Snap Chat are all vying for those ad dollars as well,? he said.

Final Take
Michael Barris is staff reporter on Mobile Marketer, New York