Twitter CEO Dick Costolo: We're 100% Focused on Advertising

But the Company Has 'A Ton Of Work to Do' on Targeting Promoted Tweets

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When a company has the kind of user base and data sets that Twitter enjoys, business opportunities aren't going to be in short supply. Yet as Twitter continues to grow its platform into a social-media powerhouse, the company's CEO says he is laser-focused on building revenue exclusively through advertising.

Dick Costolo
Dick Costolo Credit: Bloomberg

In a wide-ranging keynote interview at All Things D's media conference in Laguna Niguel, Calif., on Monday night, Twitter CEO Dick Costolo said that while the company is tempted to pursue revenue paths such as e-commerce or analyzing tweets for consumer sentiment toward brands, it's going to maintain focus on its advertising products.

"We don't feel like we need to add another component to the business," Mr. Costolo said. "We think we can do it with what we already have.... We just need to scale it up."

For Mr. Costolo, Twitter needs to expand its ad business in two ways: the number of advertisers with which it works and the geographic markets in which it aggressively sells its ad products.

"It's growing incredibly well," he said of the advertising business, in the first sign that "incredibly" was going to be his adverb of choice for the evening. The engagement levels for promoted tweets, he went on, "are incredibly high."

Mr. Costolo admitted that the company still has "a ton of work to do" in honing the targeting and frequency-capping of promoted tweets. But he seemed satisfied in the general acceptance of the advertiser-powered tweets among Twitter users -- after initial pushback from users about tweets infiltrated their streams from users they didn't follow. If there's been significant outcry from users since the promoted tweets launched platform-wide, "I haven't seen it," he said.

During the Q&A session, a reporter asked Mr. Costolo if Ad Age 's report that Twitter would roll out more brand pages this week was true. He didn't answer the question directly, but he gave an overview of why the company is building brand pages.

"It used to be the case when you came to Twitter and went to @VirginAmerica, that that page looked like a transcript of their customer call center," he said, noting that the brands that use Twitter effectively as a customer-service tool were being penalized by a user interface that would just display all their tweets chronologically. So that helped inform the decision to create brand pages that allow companies to possess more control over what tweets are publicized and how.

"Let's allow brands to use Twitter as a customer-management tool…but we don't have to surface that content front and center," he said.

Mr. Costolo was also asked whether it was accurate that only brands that spend $25,000 would get the next crack at brand pages, per the same Ad Age report. Mr. Costolo ducked the question, at least initially. But Peter Kafka, the reporter who interviewed Mr. Costolo, suggested that there was a business case to be made for giving preference to the company's best advertising clients.

"Now that you say it," Mr. Costolo said, "it sounds perfectly reasonable."

In a bit of a surprise, Mr. Costolo said the company would work hard this year to build a better Twitter experience for those consumers who use so-called feature phones, not smartphones. The thinking is that the company wants these users to familiarize themselves with the platform so that they are already fans of the service when they eventually upgrade to a smartphone.

Mr. Costolo also talked at length about how Twitter has become the go-to second screen to accompany TV viewership, citing his own experience watching NFL games on TV while tracking the tweets of ESPN anchor Trey Wingo on his iPad simultaneously. So does this mean Mr. Costolo sees promise in social-TV products that encourage users to check in to a specific TV show? Not so much.

"I think they'll just do it as a function of using Twitter," Mr. Costolo said.

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