Twitter Changes Pricing Model For Advertisers

Social Media Platform Introduces Four New Ways to Buy Ads

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Twitter is changing its prices. On Thursday, the company announced it was introducing new tools for what it calls "objective-based campaigns," which include four new ways advertisers can buy ads on the social media platform.

Previously, ad buyers worked on a cost-per-engagement model, paying for promoted Tweets only when users interacted with them -- a click, reply, retweet or favorite. Now, advertisers can opt to pay on engagements to capture new followers, conversions to an external website, app-installs or user email addresses.

For Twitter, the new model is intended to net more ad dollars and expand its young products. In June, the company began running app-install ads, which they charge per app click. It introduced its rich-media "Lead Cards" in 2013 and has been aggressively promoting the product as a tool to reach non-logged in users, an increasingly coveted demographic for Twitter.

A video promoting the new tools show how a camera marketer can opt to pay only for ads that lead to website clicks, demonstrating how easily it can support sales lift measures. Last month, Twitter acquired the payments infrastructure company CardSpring, the first public step in its nascent e-commerce strategy.

"It's a maturation of the medium," Sean O'Neal, president of Adaptly, an ad-tech firm specializing in social media, said of the changes. "Marketers are now seeing that these platforms can drive true business outcomes."

Advertisers have voiced skepticism of engagement as the ideal metric for the platform -- unlike Facebook, where users will frequently dole out "likes," a Twitter interaction can be more rare.

By letting advertisers bid for other objectives, Twitter is now shouldering the risk, said Addie Conner, chief innovation officer of SocialCode, a Twitter API partner. "This puts more of the burden on Twitter to be able to scale the ads themselves through their own back-end algorithim," she said. That's a marked difference from Facebook, which prices on a cost-per-impression basis. "It's more of a, 'We will try our hardest' versus a guarantee," she said, comparing the two platforms.

Under Twitter's updated campaign tools, advertisers can continue to buy on an enagement basis. They can toss a paid ad into multiple measurement buckets as well, but Twitter's sales team will push them to select one metric per campaign, a person close to the company said.

Twitter declined to comment on the changes beyond its announcement in a blog post. The company has tested the new model with small business advertisers and API partners.

Ad engagements on the platform have risen rapidly since 2012, when Twitter first reported the metric based on the number of interactions per "timeline views" (the number of times users refresh their feeds). But the cost per engagement has steadily fallen. It declined by 35% year-on-year during its most recent quarter, although the company reported that the metric netted quarterly growth for the first time, thanks to high demand from advertisers during the World Cup.

Twitter posted a surprisingly strong second quarter, reporting $277 million ad revenue.