Twitter Gears Up Auto-ads For Big Clients

14 Jul, 2011

Twitter is courting bigtime advertisers and will soon allow them to tailor, automate and publish ads in bulk directly onto the Internet microblogging service, according to two people with knowledge of the matter.

The company will soon provide a so-called application programming interface, or API, that will help advertising agencies and corporations deliver large volumes of ads on Twitter. Access to the API, which Twitter plans to begin in the fourth quarter, will initially be rolled out as a test involving a limited number of partners, the people said.

The move could provide a boost to Twitter's fledgling advertising business by opening the door to large online marketing agencies that rely on specialized software tools to deliver a blizzard of ever-changing ads on popular websites like Google and Facebook.

"It would increase the opportunity for advertisers to participate in that marketplace. Right now you've got to talk to a salesperson" to run an ad on Twitter, said one of the sources, who wished to remain anonymous because details of the new service are confidential.

The move could also pose a risk to Twitter for consumer backlash if it results in a barrage of ads to users of the service, particularly if the promotions are of the less-exhalted variety like ads for teeth-whitening and weight-loss products. So far, Twitter has taken a go-slow approach to advertising for fear of annoying users with intrusive promotions.

The five-year-old company is taking steps to ramp up its revenue at a time when its valuation is surging and anticipation mounts that it could follow in the footsteps of LinkedIn and Groupon by floating shares in an initial public offering.

According to a recent report in the New York Times, Twitter is seeking to raise $400 million in funding at an $8 billion valuation.

Many details have yet to be hammered out, but the sources say that Twitter's advertising API will initially let advertisers automatically deliver ads for two ad formats on its website: Promoted Tweets and Promoted Accounts, according to another one of the sources.

Promoted Tweets allow an advertiser to effectively sponsor any of the 140-character text messages that users send on Twitter, while Promoted Accounts let an advertiser promote its Twitter account to users of the service.

While Twitter is among the most popular Internet social networking companies with more than 200 million registered accounts, its advertising efforts have lagged those of larger rival Facebook, which is expected to generate $4 billion in ad revenue this year.

New Kid On Advertising Block

Twitter, which only began offering advertising on its service in April 2010, currently has roughly 600 advertisers, and is expected to generate about $150 million in ad revenue this year, according to estimates by research firm eMarketer.

"We're always thinking of ways to help marketers get more value from advertising on Twitter," said Twitter spokesman Matt Graves in an emailed response. He declined to comment specifically on Twitter's advertising API.

An API is a standardized set of technical specifications which allow different software programs to communicate and interact.

Twitter's forthcoming advertising API could complement a self-serve advertising system, which the company has said it plans to introduce by the end of the year.

Websites like Facebook and Google offer basic advertising self-serve features designed to ease the process of buying ads by small businesses. The systems allow an advertiser to fill-out online forms to set certain parameters of the ad, including the text displayed in the ad and the price they want to pay.

That kind of system is not well-suited for larger advertisers that need to buy ads in bulk. Companies that rely on heavy online marketing such as Groupon and Zynga, as well as ad agencies representing multiple clients, often run large-scale online ad campaigns that can involve blasting thousands of different permutations of an ad.

Numerous companies have built special tools that can connect directly to the advertising APIs used by Facebook and Google.

"They can just flood the system with ad types and almost in real time they can figure out which ads are working, which are most successful, which are getting the clicks at the right price," said Debra Aho Williamson, an analyst at research firm eMarketer.

"The risk of course is that it's more challenging to police and to make sure that the kinds of companies using the ad system are using it correctly," she said.

(Editing by Bill Rigby, Edwin Chan and Bernard Orr)