Twitter Takes the Wraps Off Its Version of Facebook's Giant Moneymaker

Twitter may have a user problem, but it doesn’t have a revenue problem — it’s going to do more than a billion dollars in sales this year.

But here’s its newest bid to make even more money — “app install” ads, a newish format that has been a giant hit for Facebook.

As we told you earlier this month, these have been in the works for some time, and have been showing up in users’ feeds for the past few weeks. Now Twitter is formally starting to sell them to app developers, who use them to get people to install their apps or return to apps they’ve already downloaded to their phones.

I don’t usually spend much time reporting that a thing that we knew was coming has arrived, but in this case it’s worth noting, because app ads could be a very big deal for Twitter.

Industry observers think that app ads are one of the main reasons that Facebook went from zero mobile revenue to a ton of mobile revenue, and may account for half of Facebook’s mobile ad money today. That’s more than a billion dollars a quarter.

So if Twitter can replicate some of that success, it’s a huge win for Dick Costolo — one that could make his user growth/engagement issues seem less dire.

On the other hand, Twitter’s user numbers are going to constrain the upside for app ads: Facebook has more than a billion users, and knows a ton about them, which means it’s by far the dominant app ad market. Twitter has perhaps a quarter of Facebook’s users, and is straining to add more. App ad buyers like targeting but they love reach, so if Twitter stays smallish, app ads may as well.

Twitter’s initial response is a move to tie MoPub, the mobile ad exchange it bought last fall, to its own ad platform, so developers can now buy ads on Twitter and MoPub via the same software.

Twitter is playing up the fact that MoPub’s ads can show up on more than a billion phones a month, which makes it seem like Twitter’s app ads will have the same potential as Facebook’s. But MoPub has already been selling app ads, and it hasn’t replicated Facebook’s success, so there may be less impact there than Twitter would like.

The other issue for Twitter, along with Facebook and everyone else selling app ads, is the fact that the market is so dependent on the behavior of Google and Apple. If one of them radically changes the way it handles app ads, things could swerve dramatically.

This article originally appeared on Recode.net.

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