Twitter has built itself a sizable media business in the past three years, thanks to a focus on its ad products and sales teams. But a bigger opportunity for the company as it gears up for a very buzzy initial public offering lies beyond sponsored tweets and promoted trending topics.
It’s the data, stupid.
Twitter knows a lot about who its users are, what they like and what they’re likely to buy. To marketers, that information is worth a lot. The power of Twitter’s now ubiquitous social buttons and widgets is often overlooked, but they essentially allow the company to track users’ movements across a huge portion of the Internet. Every time a user visits a page with a tweet button, for example, Twitter records the page and ties it to the user’s account.
Given that the majority of publishers now make use of Twitter’s widgets in one form or another, the company is able to build an extremely detailed and persistent picture of users’ browsing behaviors, tastes and preferences, and can couple them with the location data and other demographic information users provide when they sign up. Few companies can collect the type of audience information Twitter can. It’s building some of the richest user profiles around.
“They know whom you’ve followed, what you’ve tweeted, as well as what pages you’ve browsed,” noted former Facebook product manager Antonio Garcia in a blog post last week. “It’s also long-lived data because it’s tied to a Twitter user ID, rather than to a mere cookie, so cookie churn doesn’t kill it.”
In other words, Twitter’s data is persistent. More persistent than the cookie data many advertisers currently use to target their ads and offers.
Twitter’s already putting the information to use, too. It currently informs its “who to follow” suggestions. If users visit ESPN.com, for example, Twitter might suggest they follow a sports personality.
The same data would be extremely powerful if used to target ads, either on its own platform or on third-party sites. Twitter’s PR department did not reply when asked if it’s currently using it for those purposes. In theory, Twitter could forego serving ads on its own service entirely, and still generate billions in revenue by helping to target audiences on third-party sites.
That opportunity is particularly interesting in light of Twitter’s recent purchase of ad network MoPub. For the first time, it has access to inventory on third-party properties which, coupled with its data, could prove extremely valuable to marketers. MoPub is focused on mobile inventory now, but there’s no reason Twitter couldn’t use its technology to inform ads across all devices. Twitter ad executives pointedly said after the deal that its focus is on native ad experiences, not necessarily promoted tweets.
Twitter isn’t the only company that has access to this volume of user data, of course. Through their respective buttons and widgets, companies such as Facebook, Pinterest and others could easily build similar profiles. According to Garcia, Facebook has access to similar data, but is “not doing much with it.”
But it’s not just audience data that Twitter brings to the table. Its acquisition of TV data analytics companies Bluefin Labs and, more recently, Trendr speaks to the opportunity it sees around the TV-related information its platform surfaces. To a certain extent, those purchases will help sell its own suite of ad products, but beyond that, they could help advertisers better understand the impact their TV ad dollars are having.
Ultimately, Twitter’s revenue model remains in its infancy. Marketers are impressed by the ad products it has rolled out so far, but based on the way it is positioning itself, it could be the data side of its business that emerges as its cash cow. The media often speculates if Twitter is a technology company or a media company. Maybe it’s actually a data company.
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