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Twitter Continues to Double Down on Live Events

By Evan Niu, CFA - Jul 24, 2015 at 8:00AM

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Twitter's total audience strategy has always emphasized its strength in live events. The company is now borrowing a sales model from TV networks.

Covering live events and allowing users to publicly engage during these events has emerged as a key differentiator for Twitter ( TWTR -0.40% ). This isn't an arena that larger rival Facebook ( FB -0.07% ) can easily encroach, since Facebook isn't inherently a public platform in the way that Twitter is. That's not entirely for a lack of trying either, since many years ago Facebook attempted to roll out a way for users to make status updates entirely public, as an obvious response to Twitter's growing popularity at the time.

Even though Dick Costolo is out as CEO, this was one part of his total audience strategy that made a lot of sense, since live events attract massive audiences on Twitter. As such, it makes sense that Twitter is focusing on aggressively targeting this niche.

Why hasn't Twitter done this before?
This week, Twitter introduced a new tool called event targeting that allows advertisers to target specific live events ahead of time, making the process of buying ads much more seamless. Twitter is aggregating a calendar of live events that are likely to garner public interest, and then making projections around things like potential audience sizes. Up until now, it's been a manual process for advertisers, but Twitter's new tool streamlines the process.

If any of this sounds familiar, it's because it's the same advertising model that's been in place for years for TV networks selling inventory ahead of time. In fact, it's a wonder why Twitter hasn't introduced tools like this in the past considering its strength in live event participation. Better late than never.

It's all about targeting
Twitter has never had the sophisticated targeting techniques that Facebook and other larger advertising rivals have been able to develop over the years. The company has been trying to ramp up its own ad network following the 2013 acquisition of MoPub for $350 million, but it's safe to say that it's still the underdog in social media advertising.

Twitter exec Ameet Ranadive says that the company will analyze a handful of user engagement signals, such as who users follow, what they tweet, or what they respond to, in order to gauge interest in certain events. It will then turn around and use this data to target ads.

CFO Anthony Noto broadly discussed the company's targeting capabilities at a tech conference in May, effectively acknowledging that Twitter still has its work cut out:

And so we've just started plucking the app data and we've just started to use that for targeting. Geographic information, we talked recently about a deal that we struck with Foursquare to get point of interest information, POI information. We want to integrate that geographic information to our ads to make them more targeted, so two very simple things and there's a whole host of pipeline things in targeting that we still have to do.

But there is also a fundamental challenge with targeting the upward of 500 million visitors who visit the site each month without logging in. That's a large audience that appeals to advertisers, but since these visitors aren't logged in and sharing information, they can't be tracked or targeted as easily.

In many ways, Twitter is a niche service, but the live event niche is one of the most lucrative areas where it has some key advantages. Hopefully, whoever Twitter finds as a permanent CEO will execute on the strategy better than Costolo.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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