clock menu more-arrow no yes

Twitter Ads Need Help, but Twitter May Already Have an Answer

Twitter's new ads need some work, but it has a plan. (And Google's involved.)

Anthony Quintano for Re/code

Twitter lowered its revenue projections for the year and hinted at more user growth issues to come when it reported a disappointing earnings quarter Tuesday. It was a bad combo that cost the company nearly 20 percent of its market value before the markets even closed.

But if you look hard enough — for some of you stock holders, that might mean looking really hard — there may be a silver lining.

Buried below the rubble that was Twitter’s earnings report were two bits of news that may help the company dig itself out of its revenue hole. One of those bits, a partnership with Google, reveals the two digital juggernauts teaming up to improve their offerings to advertisers — offerings where Facebook is running ahead of the pack.

The first silver lining was the acquisition of TellApart, an ad tech startup that Twitter paid more than $500 million for in an all-stock deal. (The deal would have appeared much larger had the stock not taken a nosedive that very afternoon.) Put simply, TellApart specializes in cross-device targeting, which means that it helps advertisers know if their mobile ads are leading to sales on other devices, like tablets or laptops.

The second important piece of news was a partnership with Google-owned ad platform DoubleClick, the second significant Google partnership for Twitter in the last three months. The deal, in short, means that advertisers using DoubleClick (this is most of the world’s biggest brands) can now easily buy Twitter ads through the platform. It can also take data from those Twitter ads — favorites, retweets, clicks — and layer it with their other DoubleClick campaign data to determine how successful their Twitter ad actually was.

These announcements from Twitter are significant in that they both aim to solve one major problem for advertisers: Attribution, or which specific ad led to which specific sale. Twitter blamed its revenue miss in Q1 on lower-than-expected clickthrough rates on its new direct response ads, or ads intended to drive a specific result like a website visit or an app install.

Twitter used to charge advertisers for all engagement on these ads, including things like favorites or retweets. Now it only charges for the desired result, like an app install, so it’s charging for fewer clicks and making less money. That means the ads are more valuable to marketers, and hopefully for Twitter that could lead to more ad spend from marketers. But so far, they haven’t been doing that.

Twitter

Enter TellApart. If an advertiser knows that its Twitter ad is leading to sales, it’ll likely keep spending. And TellApart is intended to prove Twitter ads generate actual return on investment, even if it’s on another device. It would also be easy to imagine Twitter bringing the TellApart technology to advertisers buying through Twitter’s MoPub ad exchange.

The DoubleClick deal should help, too. If big brands are already using DoubleClick to run their ad campaigns, it should also be fairly easy to use to advertise on Twitter.

For Google, the deal is another attempt to bolster DoubleClick as the go-to vehicle for ad campaigns. Two weeks ago, Google announced the addition of YouTube ads to the platform. Twitter’s ads — social, mobile-heavy and “native” in the stream — deliver in areas where Google is noticeably weak.

More critically, the Twitter inventory helps Google ward off Facebook. Very few companies right now can offer an advertiser every tool they need. Facebook is getting close, and offers its own cross-device tracking tools with Atlas. This kind of technology is no longer a secret weapon — advertisers are growing to expect it.

Facebook has been trying to build its own ad powerhouse, and pretty successfully, it appears. A very crude (but helpful) way to see this partnership is that Google and Twitter are linking arms to arbitrage against Facebook.

The DoubleClick partnership will take effect by the end of the summer, according to a source familiar with the companies.*

All these companies are competing for ad budgets, and a company that can offer a one-stop shop for advertisers may be the ultimate winner.

That’s still far off, says Ajay Agarwal, managing director at Bain Capital Ventures and a TellApart investor. In other words, Twitter’s success won’t hamper Facebook’s success or vice versa — the money is coming from other places, like TV or even print ad budgets.

“I think Facebook has clearly shown the playbook,” he told Re/code. “[But] we’re nowhere close to a zero sum game.”

*Update: An earlier version of this post said the DoubleClick partnership would start in May. In fact, that is Twitter’s other partnership with Google, around search listing.

This article originally appeared on Recode.net.