Earlier this month Twitter CEO Dick Costolo announced he would be stepping down from his post on July 1, and Twitter co-founder and former CEO Jack Dorsey would take over as interim CEO.
There are a lot of questions over what the move means for Twitter at large, but there are also questions over what it means for the company's ad business and its advertisers. Ad Age put some of those questions -- and others solicited from advertising and agency execs -- to Twitter's President of Global Revenue and Partnerships Adam Bain, who's said to be a frontrunner for the permanent CEO role, and a bit of a fashion icon.
Mr. Bain talked about his working relationship with Mr. Dorsey, Twitter's product pipeline -- including Project Lightning -- and how, in his words, "Twitter is becoming a much more media-centric consumer experience."
What does the CEO shakeup mean for advertisers and for Twitter's advertising business?
It isn't going to change how we work with our brand and agency partners. Essentially what we announced is that the co-founder and the inventor of the product, Jack [who co-created the first version of Twitter with Noah Glass], is coming back into the company as CEO as of July 2. That's something that I am personally really excited about. I've had a long relationship with Jack here in my almost five years of being at the company. He and I meet on a weekly basis to go through the intricacies of how the business has been growing. He's got tremendous perspective, therefore, on the business, on the team, on the products that we're launching. He's been extremely collaborative in how the business has grown in sharing ideas about strategic direction for the ad business and the other parts of our business. And so I'm personally really excited and energized about the opportunity to bring him back into the company as CEO, and I think ultimately we have an amazing lineup of product innovation that's rolling out to consumers. And I think ultimately what our brand and agency partners are going to feel more of is this great product that's launching out to the marketplace.
Have you or your team reached out to advertisers and agencies about what's going on?
Like in any management transition, we've reached out to each one of our big partners to give them a heads up and to make myself available if they have any questions. The response that we've heard back -- since many of them have already met Jack, or know Jack, or we've brought Jack in to speak to either agencies or big marketing partners -- [is that] there's a familiarity there with the marketing community. Jack, in particular, is a brand and marketing aficionado. So there's a mutual respect. Jack has amazing respect for brands and for marketers and for creativity. When he came back to the company the last time around [in 2011 as executive chairman], he helped the logo and identification study that we did, which ultimately ended up in changing the Twitter logo to what you see today versus the original version of the bird logo. So in general he's someone who loves marketing. He's also somebody who ... understands the power of small businesses in the world and has built software and hardware [through Mr. Dorsey's payment services company Square] to help those businesses do work. So he's incredibly commercial in that way.
Are there any changes in Twitter's ad strategy directly related to the CEO change?
There are a bunch of things that we're doing which are bold, and you should continue to see us make even bolder moves in this way. Just this past week alone, we announced a video product for consumers but also marketers that's a complete bold step out from where the rest of the industry's norm was around the topic of viewability. When we made the announcement for video, we also announced that the charge point for autoplay video would be only when the video became 100% in view. The other piece of it was that we also announced third-party verification of this viewability standard. Both of those things are better than our peer set and better than industry standard. It's something that we've taken a step out because we just felt it's the right thing to do. It certainly would help [advertisers' gauge the return on their ad investments]. And it would show that Twitter has built, and continues to build, the highest-quality ad platform in the business, and we think that is a really great example of great innovation that's going to help the marketplace.
The other thing that -- I don't know if you saw it this morning -- is that there's a really interesting product in our pipeline. In my almost five years of being here, I've never been more excited about what we've got in our product pipeline. Overall, our relationships with agencies and advertisers are very strategic, and unlike other folks in our business, we're very transparent about where we're going and what we're working on. So we have a period next week at Cannes where we're able to talk to those partners again about strategy and roadmap and the things we're working on.
There's been a lot of scrutiny of Twitter's ad business, especially after the most recent earnings report. What's working when it comes to Twitter's ad business, and what's not working?
Our revenue ramp is one of the fastest of all time. Four-and-a-half years ago we had zero in revenue. Last year we did $1.4 billion in revenue. We've said publicly we'll go from $1.4 billion to well over $2 billion this year. There's no other billion-dollar-plus ad space business that's growing faster on the year-on-year basis than Twitter. Just last quarter alone was 74% year-on-year growth. So there's no one even that comes close to that growth rate. We're excited about the growth we've had in the business, but we also view that we're just getting started and there's so much left for us to do.
One of the areas of development for us is certainly around our direct-response business. We've been talking publicly about this, on the last earnings call in particular. To give you some perspective about this, we started our monetization path by focusing on the brand business and just now are getting into direct-response and performance-based business. Most of our peers and most companies of this size go the other way; they start with direct-response and then they try to ladder up into legitimacy, into brand. But when I got here four-and-a-half years ago, I realized the biggest brands were already using the platform. So we had a real opportunity to do what no one else had done, which is win first in the brand space before conquering direct response.
So that's what we've done. Our product set, our success, the measurement, the targeting and our efforts for the first four-and-a-half years were really centered around our brand business. I think there's probably no one that's done more in the brand business with just 140 characters. But I think that the next big area for us is around direct response and down towards the bottom of funnel. And we've got a number of things in targeting, measurement and creative that we're going to roll out on the product side to help improve performance. We're singularly focused overall in ROI performance for all marketers, so I think what you're going to see on the DR side of things are a series of product launches, which will help both direct-response marketers and brand advertisers find even better ROI.
I was going to ask what Twitter's doing about the idea among advertisers that it's weak when it comes to direct-response advertising and measurement. So here's a question from one of the agency execs I talked to: What are you doing to differentiate Twitter from all the other places where advertisers can spend their money today?
We think it's the highest quality ad platform, and ultimately we're building towards the highest ROI platform in the world as well. But Twitter's already differentiated because of the human emotion of the consumers that touch the platform every day. When they come to Twitter, they're in this mode of what's hot, what's new, what's going on in the world or what's happening in my world. Those are the questions that those users are there to answer, and marketers have a really valuable voice in helping answer those questions. It turns out that answering those questions is an unbelievably ripe monetization opportunity. I've said this before: ultimately monetization on any of these platforms is about monetizing emotions. And the emotions consumers have when they touch Twitter are ones of discovery and openness. They're coming to the platform asking the question 'What's up?' and marketers can help answer that question. That's an unbelievable opportunity in marketing.
Let's talk about Project Lightning. It's a new feature being added later this year that will create curated live-event feeds for people to check out while the event is going on. What is it, and what's in it for advertisers?
So this one I unfortunately have to be super vague about because -- I can refer back to that story [on BuzzFeed quoting Twitter execs including Messrs. Dorsey and Costolo about the product] -- but we haven't made any announcement about it publicly yet.
But isn't the BuzzFeed story a public announcement?
Yeah, sorry, it's just that we haven't commented and specifically, I haven't commented on the advertiser portion. So I'll leave that one a bit up to your imagination, though it's probably not too hard for you to think about how monetization will bake into the Project Lightning platform. But it's pretty simple. Project Lightning ultimately is part of a broader effort to organize content on the platform. We have an incredible amount of content that's flowing through the platform. We've talked about how we better organize that content for consumers and then also for marketers as well. As you probably read, it is a highly media-centric experience, which dovetails nicely with all of the work we've been doing on the video and media side
A question I got from a few execs was asking what you are doing to give brands a reason to advertise on Twitter outside of live events?
There's nothing like live for Twitter. ... But what most savvy marketers understand about Twitter is there are everyday live moments for them to take advantage of. These may be people expressing intent, interest, talking about certain brands or topics. There's a massive set of everyday moments to take advantage of on Twitter, and that's really what we've been working with the marketing community over the last couple years -- to help show is how big the opportunity is in everyday on the platform. And, in fact, there's an economic incentive as well. As I think you know, most of our revenue comes out of auctioned advertising products. During these simultaneous big live events, that's where the auctions are thickest. So as a marketer, savvy marketers especially are realizing there's a huge economic advantage for being constant and every day in front of consumers on Twitter versus just coming in and spending money during the live event and then going dark the rest of the time.
Another very popular question: Vine and Periscope -- how is Twitter going to make money from these apps?
We're really excited about Vine and Periscope. Periscope is really an embodiment of live and just the enormous creativity that exists in the world when you look at it through a live lens. And certainly Vine, which opened a brand new set of creatives and a creative class of people who have quit their day jobs and are producing content now for the marketing community. This creative class is really interesting. In fact we think so much of it that we've already started monetization for both through a company that we acquired a couple months ago called Niche. Essentially Niche a software platform for creators to better connect with agencies and marketers who are looking for help on campaigns for Vine, Twitter and even for some other platforms like YouTube, Pinterest, Instagram and the like. So it's a way to connect to this creative class for incredible and nimble content production for these platforms. So we are monetizing these platforms today through things like Niche. I think what you see even last week is that Twitter is becoming a much more media-centric consumer experience with autoplay for consumers and that's just going to mean great things for Vine and Periscope plugging back into Twitter.
This week Twitter officially rolled out autoplay video ads and will only charge advertisers if their ads are 100% in view and play for at least three seconds. Even though advertisers are pretty happy about the 100% in-view guarantee, this adds to a measurement problem they're facing when evaluating whether people are watching enough of their ads to justify the costs. Yahoo also charges brands after three seconds. Meanwhile Facebook and Snapchat charge brands once their autoplay video ads are served, and YouTube charges once the entire ad has played or at least 30 seconds of it. Why did Twitter choose this way of charging brands, and are you doing anything to help them with the measurement problem?
The first one and second one are somewhat connected. This product has been in beta for about six months. There were early stories about what we were showing to people at CES. I think you may have even written one or two stories about this. So we've had in this product in beta for a while and have done a ton of testing on consumers and with marketing campaigns. We also have about two years or so worth of data with Vine. Autoplay really was brought to the world first by Vine. So we have a ton of data about how consumers experience that content. Everything for us starts at the consumer experience and what we saw is that consumers loved the autoplay experience. It increased almost like Net Promoter score-style measures for favorability for Twitter the product. It lifted it 2.5 times after the test group was exposed to autoplay. It increased video recall 14%. And most importantly for marketers, we saw a 7 times increase in video completions of ad campaigns. So we knew it was the right thing to do for consumers and we also knew it was the right thing to do for marketers.
Ultimately then our decision came down to -- it was actually a really easy decision. There have been a set of advertisers and marketers that have started the dialogue with the marketing community around viewability in particular. I think Unilever and [its CMO] Keith Weed helped lead the way on this. We started having conversations with Keith and GroupM months ago about our video product and showed them some of the data that we were collecting both on how consumers were experiencing this and also real data from campaigns that we've been testing this way. We worked in a collaborative way to get to our standard of 100% viewability. And we believe so strongly in it that we're willing to open up our platform for third-party verification through [ad-tech firm] Moat, which Unilever and GroupM are supportive of as well. We just felt like it was the right thing to do.
The viewability decision just comes down to common sense. To charge an advertiser for only having one pixel of the ad in view for one millisecond, that just seems backwards. It doesn't seem like the right thing to do for marketers, and ultimately that holds back advertiser innovation in the marketplace. So what we wanted to do was set up the highest-quality opportunity for a view. And therefore what we think it will do is bring all kinds of great creativity and innovation from the advertising market into Twitter, which will mean better ads for consumers. So I think ultimately while it will have an increase in ROI, we also know that marketers pay for quality and reward quality. Through the conversations with GroupM and Keith and the rest of the Unilever team, they made it very clear that they put a premium on quality. So our decision to do it was pretty simple. It was a move toward quality and trust. Whether or not others of our peer set decide to follow in that path, that's not for me to decide. But for us it was a pretty easy decision. We stand behind quality and trust.
Now that autoplay video ads have finally launched, what are your top product priorities for the rest of 2015?
We're going to continue to innovate on the brand side. After the autoplay launch, we've got a bunch of things we're working on for marketers around helping ease the branded experience, especially around creative and how to make even more creative and beautiful ads and marketing messages for the Twitter audience. The second one is certainly around direct response. We've talked about this on the last earnings call, but we've got a set of product launches teed up for targeting, measurement and creative, which all ladder into improvements for our direct-response platform.
And then I'd say the last one is really around measurement, and this is one that will continue to be an evolving story for us. Today we do closed-loop measurement for in-store purchases, and we certainly do all kinds of Twitter measurement as well. We made an announcement that we're going to open up to third-party measurement for direct-response advertisers through [Google's ad-tech system] DoubleClick. We're excited about that going live later this year. Up until now there was no way to actually measure Twitter from a third-party standpoint.
And we didn't do for two main reasons. One, mobile measurement and mobile attribution has for so long in mobile apps been completely uneffective. It didn't measure in-app activity very well. And then the second reason is we actually have -- beyond just a view of a promoted tweet to a conversion -- we actually have a really rich canvas of Twitter actions by which to paint an attribution story: somebody that sees an ad or sees an organic message from a marketer, somebody who @ replies the marketer and engages in a one-to-one [conversation] and later makes a conversion, or someone that clicks on the ad or retweets the ad and later converts. It just seems like there's a really rich canvas by which to paint an attribution story, and none of these third-party measurement systems had any way to capture that.
So our announcement with Google helps solve both of those areas for the marketer community. When it launches, we'll have collaborated with Google to do strong in-app measurement for Twitter, and there will be a special attribution model for Twitter available to those clients so that they can understand the relationship of all the Twitter actions, all the Twitter verbs to conversions. We're really excited about that because for the first time people will be able to see the true power and impact of the platform.
I said there were three, but there's actually four. The last one is we're starting to show that Twitter is larger than just the logged-in user base. We started talking about this over the last two earnings calls. What we've said is that there is at least double-the-sized audience that is logged out of Twitter versus logged in, and we have over 1 billion audience in syndication, that's syndication of ads and syndication of content. So what you will see us doing from a monetization roadmap is move quickly to monetize the logged-out audience and the audience in syndication that we have.
These are massive opportunities for the company and ones where right now marketers are just confined to the logged-in user base. You can start to see the opportunities. The Google search deal has gone into effect [in North America for smartphones and tablets], so if you do a search for a brand -- I'll use Unilever to make Keith happy -- if you go do a search for Dove on your mobile, you'll see Dove tweets in the Google search results. If you click on those tweets, you'll be moved to a logged-out view of the Dove profile. You won't see any ads there. You do that same search for events or hashtags or topics or people; you start to see Twitter content moving into the Google search results in a pretty massive way. It's also driving a ton of traffic to Twitter in a logged-out state. So it's the beginnings of showing the world how big of an opportunity our logged-out user base is. And then certainly in syndication, it's a massive opportunity because tweets are already everywhere on other websites and inside of other apps.