| SAN FRANCISCO
SAN FRANCISCO Aug 2 If the millions of
Olympics-related tweets flooding the Internet in recent days are
a measure of Twitter's popular appeal, the company's big
presence in London also signals something else: its arrival as a
major player in the world of big-time brand advertising.
In sharp contrast to Google, which initially built
its businesses mostly by persuading thousands of small companies
to buy "direct response" ads, Twitter's emerging strategy
focuses on selling elaborate brand campaigns to major marketers
such as Procter & Gamble Co and Verizon Communications
The Olympics have presented a prime opportunity for Twitter
to position itself as a new media channel that complements TV
broadcasts - and carries the big-name ads to match.
"We can service the very biggest brands in the marketplace,"
Adam Bain, the company's president of revenue and key
advertising strategist, said in a recent interview. "The
conversation that's happening on TV, or happening live is also
happening on Twitter. That's very valuable."
Courting major brands is an unusual play for a six-year-old
company that private investors value at more than $8 billion but
has yet to prove its financial viability. It often takes years
to persuade the biggest advertisers to try a new publication or
TV show, much less a completely new medium that requires a
different creative approach.
The challenge is evident in Facebook's fitful efforts
to woo marketers such as General Motors, which jolted the social
network by pulling back from paid ads just before Facebook's IPO
GM and Facebook are now talking again, and Facebook recently
began a boot camp at its Menlo Park campus where marketers can
meet with engineers to collaborate on ad campaigns. But as of
2011, brand campaigns still accounted for less than 40 percent
of Facebook's $3.7 billion in revenue, according to estimates by
Even Google, which revolutionized direct response ads by
showing them next to search results and has reaped huge profits
in the process, has not fully cracked the code when it comes to
But the advertising giants say their early experiments with
Twitter have shown remarkable results.
Consider the case of PepsiCo, which spent $640
million in 2011 on marketing, according to Kantar Media.
Beginning late last year, about a dozen Twitter staffers led by
Bain flew to PepsiCo's offices in Purchase, New York, for a
series of brainstorming sessions.
Armed with data gleaned from Twitter chatter, the two
companies drew up a plan to use Twitter as a centerpiece for a
massive rebranding campaign, "Live for Now," that tied the soft
drink to pop music stars and played up its youth appeal.
As the campaign unfurled in June, Pepsi rolled out a series
of music videos on its Twitter page based on which artists were
most discussed on Twitter, and doled out downloads for hit
songs. In late June, Pepsi threw a Katy Perry concert in
Hollywood that was live-streamed within a tweet on Pepsi's
The company also paid Twitter to boost the reach of select
"promoted tweets," which garnered 68 million impressions in one
About 24 percent of users who saw Pepsi's paid tweets
clicked, replied to or helped broadcast the tweets - a rate that
deeply impressed Pepsi.
"We saw some phenomenal results with those ad products,"
said Shiv Singh, the global head of digital marketing for Pepsi
Beverages. Singh said it was "extremely likely" that Pepsi will
ramp up its spending on Twitter.
WHERE THE BIG DOLLARS LIE
Twitter's focus on brand marketing, which aims to create a
positive association with a product rather than prompt an
immediate purchase, underscores a long-standing issue in the
online advertising world.
About 60 percent of the total $150 billion spent on
advertising in 2010 went toward brand marketing campaigns,
according to comScore. But in the online world, the vast
majority of the roughly $30 billion in ad spending went toward
direct response ads that generate leads or drive sales directly.
Google's search ads are the dominant form of online
direct-response advertising, but traditional banner ads are also
often judged on how many people click through and take action.
"The biggest bucket that's untapped in digital advertising
is brand marketing," said Jonah Goodhart, the founder of
advertising technology company Moat Inc.
What may enable Twitter to tap that bucket is its growing
"second-screen" appeal. The Olympics deal with NBC is aimed at
offering Twitter denizens tweets from athletes and other content
that complement the TV broadcasts. Procter & Gamble, for one,
has straddled the two media during the Olympics, using promoted
tweets to solicit feedback about a TV ad shortly after it runs
Meanwhile, Twitter has struck a similar deal with NASCAR,
while Twitter's Hollywood liaisons are pushing TV studios to
create Twitter apps that accompany popular shows.
"If you have a service that naturally lends itself to being
at the center of big media-event conversations, you go where the
big money is," said John Battelle, founder of Federated Media
Publishing, an online ad network.
At the center of Twitter's ad push has been Bain, a 38-year-
old advertising and sales executive who rose through the ranks
at News Corp beginning in 1999 and was eventually tapped to
build an advertising network across all of News Corp's digital
properties, including MySpace.
Although MySpace faded amid competition from Facebook, Bain
emerged with his reputation burnished and a deep Rolodex of
Madison Avenue contacts.
"His singular strength was that he's the perfect combination
of a salesman and a tech person," said Peter Chernin, the
Hollywood film producer and the longtime No. 2 at News Corp.
"The people who build technical products, usually none of them
Bain has built a sales team that now accounts for nearly a
quarter of Twitter's roughly 1,000 employees. Rows of
MacBook-toting advertising employees now occupy a swathe of the
seventh floor in Twitter's hulking new office building on San
Francisco's Market Street.
They are also dispersed in locations like Atlanta and
Austin, where staffers watch over major accounts like Coca-Cola
and Dell Inc. Earlier this year, the company
poached Shailesh Rao, who formerly oversaw Google's Asia-Pacific
business, to court overseas advertisers.
Bain also hired Joel Lunenfeld, an interactive advertising
executive from Atlanta, to oversee creative and engineering
teams who actively pitch ideas to Fortune 100 companies.
"Adam and Dick have been consistent and open about what
works on Twitter and what doesn't," said Noah Mallin, vice
president of social marketing at Digitas. "Advertisers trust
them. That really goes a long way."
Twitter's transition from quirky tech start-up to glitzy
media power has alienated some of its long-time fans in the tech
world who would like the company to function more as a platform
for independently developed social media services.
Its Olympic journey has had some bumps as well. The company
came under fire again this week for banning a British journalist
who was critical of NBC and tweeted an executive's email
address, leading commentators to question whether Twitter
compromised its values to side with a business partner. Twitter
later apologized and reinstated the account.
But from an advertising standpoint, Twitter's priorities
were perhaps most clearly displayed at a recent European event:
the annual Cannes Lions advertising festival.
A massive banner hung over the festival's main event hall,
featuring the company's blue bird logo and the hashtag:
"#CannesLions," Bain said.
The message to marketers was that all the festival's chatter
was "also happening on Twitter."