Twitter Inc (NYSE:TWTR) is changing its advertising fee structure to provide more choices for advertisers on how to spend their budget on its platform. The move was part of its effort to attract small business and strengthen its competitiveness against Facebook Inc (NASDAQ:FB).
According to the Wall Street Journal, Twitter Inc (NYSE:TWTR) is currently making money from advertisers if a user interacts (click, retweet, reply) with sponsored advertisements, which are displayed like tweets on their main content feeds.
Twitter Inc (NYSE:TWTR) is planning to launch a feature that would enable advertisers to specify how they want to spend their money on the microblogging site over the next few months. For example, the new feature will allow businesses to indicate that they will only pay Twitter if a user would click an advertisement to browse the fall collection on their website. Businesses will also have the choice to specify to pay only if they get new follower, users download their app or provide e-mail address.
The new advertising fee structure of Twitter Inc (NYSE:TWTR) will become similar with the strategies of other social networks and self-service online platforms. Facebook Inc (NASDAQ:FB) is already offering advertisers options to pay for specific responses from users on the campaigns such as clicks, likes, and other actions on its platform.
Observers in the advertising industry believe that the new advertising strategy of Twitter Inc (NYSE:TWTR) will be beneficial for small businesses, and it would help the microblogging company boost its revenue.
During the second quarter, Twitter Inc (NYSE:TWTR) increased its revenue by 124% to $312 million driven by new product experiences and advertiser tools such as mobile app promotions.
Craig Elbert, vice president of marketing for Bonobos Inc. said, “As an advertiser there’s a benefit to being able to pay specifically for performance. It’s an attractive option when you can quantify exactly what you’re getting.” The men’s clothing company is placing ads on the microblogging site for over a year, and observed improvement on the performance of the promotions.
Elbert also noted that Twitter Inc (NYSE:TWTR) continues to offer new products. He said, “Many of them, like this one, mimicking what works on the Facebook ad platform. I think updates like these show Twitter is receptive to feedback from advertisers.”
On the other hand, Jason Stein, president of Laundry Services, a social media firm opined,
“This makes ad setup quicker and simpler, helps marketers focus on business objectives, and enhances measurement and reporting.”
According to Twitter Inc (NYSE:TWTR), the new advertising fee structure is available in beta for small and medium-size business and certain partners worldwide. The microblogging company intends to invite bigger advertisers over the next several months.