Brought to you by: The Trade Desk
Twitter is beefing up its mobile presence, making a move for more ad dollars and data from handheld devices. On Wednesday, the social media company introduced Fabric, a mobile-app platform meant to lure more developers to its suite of products. The move pits Twitter against rival ad-sellers Facebook, Google and Yahoo, which all host competing products.
CEO Dick Costolo introduced Fabric as "the future of mobile software development" at Flight, Twitter's inaugural mobile developer conference in San Francisco. "[It's] a future that is built on a collection of fully integrated end-to-end services," he said, speaking to a room of over one thousand developers. "It is entirely about you and your users, not us."
Fabric represents Twitter's attempt to tap revenue potential beyond its flagship service. The platform weaves the technology of two companies Twitter acquired in 2013 -- Crashlytics, an app analytics firm, and MoPub, a mobile-ad exchange -- with a new software development kit built around the primary Twitter stream.
Among other features, the platform will allow for native integration of tweets inside other publication's apps. Twitter is trying to control how its content, which appears across the web and beyond, is seen by users who are not logged in. The feature will roll out with the Wall Street Journal. Twitter's ad products will not run in these embeds, an executive familiar with the arrangement said.
At the Wednesday conference, Twitter also unmasked 'Digits,' a tool within Fabric to authenticate mobile-app users via telephone numbers. Its first corporate partner is McDonald's. The fast-food giant will use Digits for all of its native apps, including Surprise Alarm, its customer-engagement app.
Digits, a two-step, so-called "white-label" log-in, will roll out across 216 countries, in 28 languages. Tying login info to phone numbers, rather than email addresses, could also be more lucrative in ramping up active users globally, where Twitter is seeing its fastest growth.
Fabric will not immediately impact Twitter's ad business. However, by easing the process for signing up users, collecting data and measuring analytics on mobile, the platform could bolster Twitter's biggest ad engine -- last quarter, 81% of its $277 million in ad revenue came from mobile devices.
$142.5B 2015 U.S. ad spending for 200 LNA
An improved mobile platform for Twitter will allow agencies that build mobile-apps to prototype designs more effectively, said Craig Elimeliah, senior VP and director of creative technology at RAPP, an Omnicom agency. "There's an opportunity for Twitter to demystify the technical aspect," he added.
For Twitter, it's also an opportunity to win back developers. In 2012, the company spurned some in the insular app-building world when it snipped the connection to its API, the link to reams of Twitter data that many companies used. Among those was an earlier startup run by Mr. Elimeliah. "Twitter saw value in the firehose," he said. "And that's where they saw a quick way to make money in throttling that."
Playing catch up
But even if Fabric appeals to developers, Twitter still has work to do. Its share of mobile ad dollars is lagging. Mobile ad spend in the U.S. will hit $19 billion this year, according to eMarketer, with Google claiming 38% of the market and Facebook cornering 10%. Twitter's expected share, 3.5%, marks a small uptick from its 3.1% share in 2013. Worldwide, Twitter claimed just 2.3% of mobile ad dollars last year.
Twitter's rivals have pounced on the app market. Facebook has its in-house developer company, Parse, which it acquired last year. Yahoo entered the ring, buying veteran app analytics and ad platform Flurry. And on Tuesday, Google announced plans to acquire Firebase, a service for real-time app construction.
MoPub could be its strongest weapon. The programmatic mobile exchange serves 170 billion ad requests a month and increasingly powers native ads across thousands of different mobile-apps. Currently, its earnings as a mobile-ad middleman are applied to Twitter's data revenue -- an area the company is aggressively growing.
In a June report, Robert Peck, an analyst with SunTrust Robinson Humphrey, wrote that MoPub was Twitter's most "underappreciated" asset. SunTrust estimated that the exchange would generate roughly a sixth of Twitter's revenue, or $500 million, by 2017.
"Google and Facebook will be the behemoths," said Mr. Peck. "But MoPub will have its slice."