Twitter is following in Facebook’s footsteps by reportedly planning an IPO that will take place in the next year. Through its IPO, it is also planning to capture the digital ad dollars that is tied up in display retargeting. Like Facebook, which launched Facebook Exchange (FBX) in the summer of last year, Twitter seems to want to do the same after its IPO. According to sources that spoke to Ad age, the micro-blogging platform is planning an exchange that will let brands retarget Twitter users with ads on the site.

While it is still unclear how Twitter is going to go about this, it has been reported that the company has met with several FBX partners who are cued in on finding the brand sites that people may have visited, locating them on Facebook and targeting them with non-standard display ads, which users can see on their social network page, with the aim of luring them back to the brand sites.

How does this work? Basically, the system works around information about a users past browsing. A partner with the site is pinged when a cookied user visits Facebook so that the partner can then bid to target that user with ads on the social network. While this is how Facebook works, it seems that Twitter may rework this model for its own micro-blogging platform. However, the company has not yet briefed any potential brand partnes about any fixed launch date.  


Twitter looks at Ad-Retargeting Exchange to cash in on the digital dollars…

From the looks of it, Twitter would also prefer brands to cash in on the exchange directly and has been reported by an executive familiar with the deal to have spoken to at least one multichannel retailer. This is not a first, though. The move to have a brand marketer on board as a seat on the exchange, as opposed to only allowing the buying of inventory through an intermediary, as is the case with FBX,  has been done by brands like Procter & Gamble and Kellogg’s, which has been seen holding seats on Yahoo’s Right Media.

The logic behind this is clear, as Twitter will definitely benefit from an advertiser’s gradual increase of display retargeting as well as the practice of purchasing online advertising that will take place as exchanges through automated real-time auctions. According to eMarketer’s VP-communications Clark Fredricksen, “more advertisers today are ready to make bigger bets with retargeting and exchange-based buying because they’re up to speed with Facebook or Google or Yahoo or AOL. The fact that some of the major advertising publishers have been doing that for a little while means that new players to the market can court advertisers with some experience doing this.

FBX’s success will definitely help Twitter rope in more buyers, as FBX has addressed two of the biggest trends in online advertising, which is automated buying and non-standard ad units. There could be a drawback with this comparison, though. FBX has a reach of over a billion people, which makes it easier for partners to come across a user who has visited one of their brand sites in the past. In comparison, Twitter has a much lesser user pool, which stands at 200 million. Thus, advertisers may have to tone down some of their expectations. However, VP of Digital Media Karsten Weide, said while talking about this that Twitters user size was big enough to work well for advertisers. 

In the past though, Twitter has always tackled new ad-targeting features by claiming that it will not increase the number of ads that a user will have to go through in their feeds. If that is the case on this platform as well, it stands to reason that the ads will be priced higher for direct-response advertisers who may be used to FBX’s bargaining rates. This could also not be the case, if Twitter gets similar bid prices for its retargeted ads, which could be comparative to the rates that FBX’s higher-priced-in-feed placements charge.

Ad exchange is just one in a long list of borrowed ideas that Twitter has taken from Facebook. The list includes interest-based targeting, an ad API as well as the opening up of its self-serve platform. There have also been reports by Bloomberg suggesting that Twitter may launch its own version of Facebook’s Custom Audience targeting option that lets marketers aim at users with ads from its customer databases.

When and if these plans come to light, the boost to Twitter’s ad revenue will be significant. And this boost will be above and beyond the projected $582.8 million in revenue that the micro-blogging site may see this year, and the $950 million it could see next year.  

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