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From Manila to Madrid, international consumers now represent more than three-quarters of the 232 million people who regularly use Twitter.
The problem is, Twitter is still figuring out how to make money from those users abroad. The company received 26 per cent of its total revenue from markets outside the United States (US) in the third quarter, compared with around 17 per cent at the end of last year, according to regulatory filings.
Turning that global popularity into international ad sales remains tricky for the company, which is based in San Francisco, as it nears an initial public offering (IPO) of stock. Many overseas brands are more skeptical of the impact of social media advertising than their American counterparts, while Twitter faces stiff competition from local social media rivals like Line of Japan, which already has hundreds of millions of registered users across Asia.
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“Twitter is not quite there yet,” says Oliver Eriksson, head of strategy at the digital ad agency VML in London, whose clients include Microsoft and Gatorade. He says the company still had to prove to potential clients that its advertising platform could reach international consumers. “They need to do it quickly to give brands confidence that Twitter can add value,” Eriksson says.
While Twitter’s highly publicised IPO is estimated to value the company at roughly $12 billion (about Rs 74,122 crore), it still remains a relatively small player in the world of digital advertising. It is expected to grab just 0.5 per cent of the total spending on worldwide digital advertising this year, according to the research firm eMarketer. That compares to $6.4 billion (about Rs 39,532 crore) that will probably be spent on its archrival Facebook in 2013.
Many international companies, like Nestlé and Unilever, are looking to increase their advertising spending within social media. But analysts say that Twitter’s relatively small footprint makes it a harder sell.
But unlike competitors like Facebook and Google that have had to adapt their desktop products for cellphones, Twitter has always been a natural fit for mobile (please see chart). As more advertising money shifts into the mobile theatre, analysts say Twitter will probably benefit from its track record.
However, in many of Twitter’s fastest-growing developing markets, like Brazil and India, persuading local marketers to spend more on advertising could prove a challenge. Many consumers in these markets still use so-called feature phones that do not provide the same social media experiences as high-end smartphones.
Often, these users do not have the same access to high-speed cellphone networks, so they have yet to respond to the advertising techniques such as promoted messages from brands, that Twitter has introduced in the US and Europe.
Facebook has confronted similar challenges and redeveloped its mobile app for use on low-cost phones without their incurring large data charges. “Twitter will have to work a lot harder to achieve traction on low-cost phones,” says Eden Zoller, an analyst at the technology consulting firm Ovum. “Emerging markets are dominated by these handsets, but that’s where the growth opportunity is.”
Twitter has said that it plans to expand its sales and marketing teams in crucial international markets, where the local ad markets are well established and may offer comparable revenue-per-user to those in the US. Twitter already has more than 15 offices around the world.
Since August, Twitter has extended some of its American advertising offerings into international markets such as ad-sponsored video clips and other sponsorship deals in large emerging markets like Brazil.
The company also has reached a deal with Kantar Media, a research company, to measure the impact of Twitter messages on British television programmes, similar to an existing relationship with Nielsen Ratings in the US. The agreement could help marketers judge the value of advertising on Twitter compared with other companies.
Eriksson says, “The company is still very young. It hasn’t figured out exactly what to offer advertisers yet.”
@New York Times
