Why Twitter Ads are Broken

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Why Twitter Ads are Broken

Twitter touted 2015 as a big year for the social network, projecting strong growth after buzz over Periscope’s launch and the release of several new advertising products.

But then Twitter released its first quarter earnings report and the stock tanked, dropping 28% on underwhelming audience growth and engagement results, and lower-than-expected revenue.

What’s to blame for Twitter’s disappointing start to the year? Is the social network’s longevity in doubt, or is this merely a sign of investor concern and not indicative of what advertisers really think?

An Advertiser’s Perspective on Twitter

During Q1 of 2015, Sachs Media Group reallocated several clients’ advertising budgets to take advantage of Twitter’s growing arsenal of advertising tools. We increased several budgets and tested new advertising creative, objectives, and tactics.

But as we move into the summer months, we find ourselves concerned as we look over the year’s initial results. We will be adjusting several ad budgets to once again focus more on Facebook, and to move additional funds into Pinterest’s advertising platform, which has produced stellar results since it’s launch in January.

The Crux of Twitter’s Advertising Ailments

Here’s the crux of Twitter’s advertising problem: The social network has expanded its targeting options to more closely resemble the offerings of Facebook, but has failed to establish an effective pricing model.

When we build a campaign, several early steps in the planning process involve setting objectives and measuring success through specific metrics. For direct response campaigns, this is easy; we focus on cost per conversion and similar numbers that fuel those conversions, like cost per website click. For more branding and awareness-focused campaigns, we emphasize metrics like visibility (reach, impressions), engagement, website referral traffic, and social sharing.

Direct Response Campaigns

Direct response campaigns, an area that Twitter has emphasized this year, provide horrible cost per click and cost per conversion numbers. The lack of a visibility-focused, cost per impression (CPM or oCPM) pricing model and inaccurate conversion tracking exacerbate the problem.

We are running into several issues of this sort when trying to track the return on investment (ROI) of Twitter advertising campaigns. While we anticipate Twitter making improvements to these systems, those changes will be too little, too late.

Branding and Awareness Campaigns

If you are not emphasizing direct response conversion metrics, your essentially left with cost per engagement or cost per website click pricing (the later if you can set a pixel on the landing page, which we can’t always do with some client websites).

This is extremely problematic in that cost per engagement includes any type of interaction on a sponsored Tweet, including tweet expansions and image clicks. You cannot put more weight behind certain types of engagement, like a retweets, mentions or website clicks.

Also, Twitter uses a quality score system that heavily favors tweets with high engagement rates. This results in Twitter allocating most of your ad buy to tweets that include images.

If you look at the basic advertising dashboard data provided by Twitter, you’ll see very low cost per engagement results. But a deeper dive into the data will likely show that 95% or more of tweet interactions came from clicks on the image, rather than the metrics we tend to prioritize.

Comparing Twitter to Facebook

Compare Twitter apples-to-apples with Facebook on equivalent metrics (e.g., retweets vs. shares; mentions vs. comments, favorites vs. likes; website clicks vs website clicks) and you’ll find that Facebook, in most cases, comes out way ahead with significantly lower cost per quality engagement figures.

Additionally, Facebook provides data on unique users reached and impressions, while Twitter only provides impressions. This makes reporting on how many people saw your ads difficult, and an additional point of concern for advertisers who want to know if their ad that produced 100,000 impressions was seen by 5,000 people 20 times each OR 100,000 people one time each.

One of Twitter’s big advantages thus far has been its early entrance into the self-service advertising world. However, this is quickly changing as Pinterest rolled out it’s advertising platform on January 1, LinkedIn continues to build its suite of ad products, and Instagram is moving closer to launching its own self-service system.

Pinterest Rocks!

Our early impression of Pinterest’s advertising platform has far exceeded expectations.

Pinterest pricing model is entirely focused on website clicks. The branding and awareness campaigns we run on Pinterest not only provide clients with relatively low-cost website clicks (most around $0.50-$1), but also tons of impressions and re-pins for essentially no additional cost. We would love to get the cost per impression (CPM) rates currently seen on Pinterest on ANY other social media ad network.

Are we 100% exiting Twitter? No. We will still allocate a portion of our ad buys to Twitter and will continue to test the social network’s new tools and products, including behavior targeting and video campaigns.

However, we are advising several clients to allocate increased spends to Facebook, LinkedIn and Pinterest as results from these social networks continue to impress, and will likely do the same once Instagram and other social networks roll out their advertising systems over the next several months.

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