How Twitter's IPO Will Impact You as an Advertiser

Twitter yesterday filed to raise $1 billion in initial public offering (IPO) in the coming weeks. The social network filed an S-1 form with Securities and Exchange Commission, which showed that Twitter generated $316.9 million in revenue in 2012 but lost nearly $80 million in profit during the same period.
 
Here’s what advertisers can expect to change after the IPO:
 
  1. Improved advertising tools.

    Twitter will likely enhance its advertising tools to entice more brand advertisers. Currently, brands can disseminate targeted ads to Twitter users through three approaches:

    While these features are highly useful, Twitter will likely come out with new functions in the near future as advertising will become increasingly important to its core business.
    • First, advertisers can target consumers who are similar to certain Twitter users. For instance, if you’re a sports apparel retail store, you can target people who are similar to those who follow @Nike, @Nikesportswear, or professional athletes such as LeBron James @KingJames. This allows you to find prospects who have demonstrated interest in your products or services.
    • Second, brands can choose from a list of over 350 interest categories to engage with particular users. Categories include golf, cars, and birdwatching. With this feature, brands can reach qualified consumers using customized messages to produce maximum engagements.
    • Third, brands can select specific mobile devices and platforms to showcase their Promoted Tweets on. For instance, if you have an Android retail app, you can promote your Android retail store by specifically targeting Android users. You can also specify the gender of the mobile user.

  2. Increased competition.

    With more advertisers using Twitter as a potent marketing tool, intense competition will also arise as brands will have to battle to rivet consumers’ attention. Currently, Twitter has 218.3 million monthly active users, over 100 million daily active users, and 500 million daily tweets. Moreover, 75% of Twitter’s active users enter the social network through a mobile device. This makes Twitter an incredibly desirable advertising platform as it not only allows companies to connect with a vast amount of consumers, but also enables brands to target remote prospects at optimal times. If Twitter can update its advertising features as predicted above, immense rivalry between brands within different industries will surely occur as they will all have to compete for consumers’ attention.

  3. Enhanced Google AdWords features.

    To respond to the change in digital advertising, Google will likely enhance its advertising tool: Google AdWords. Although the search engine giant has recently made updates to Google AdWords by rolling out Google Partners to help more businesses target consumers, it has to continuously innovate to remain dominant in the mobile space. While it’s estimated that Google currently earns $1.86 billion in mobile search ads (93.3% market share), its leadership can slowly be eroded by Twitter or other social networks if these social websites can tirelessly produce advanced, impeccable advertising tools. To maintain its lead, Google AdWords has to come out with significant improvements to its platform so that their users will remain loyal to its tool.

By filing for an initial public offering, Twitter is making a bold statement: we are here to stay. They’ve supported this declaration by continuously rolling out useful advertising functions that can help advertisers find qualified leads and alleviate their pains of receiving low response rates. If Twitter can keep on pushing new, effective advertising products, it’s likely that it’ll become one of the most powerful advertising platforms in the next decade.