The overall strategy embraced by Twitter seems to follow the KISS principle: Keep it simple, stupid! The microblogging service provider is defined by the simplicity of the communication it enables, and its advertising strategy has matched that simplicity—at least thus far.

Twitter sells advertising in three formats, and three formats only. Unlike popular social media competitors such as Facebook, it does not collect detailed demographic information, so it lacks the ability to target advertising on an individual level. Instead, Twitter allows advertisers to

1. Pay to appear at the top of a list of suggested accounts that users can follow.
2. Buy a “trending” ranking, such that the firm’s name or product appears to be particularly popular among users. This option is clearly labeled as advertising, but it also exploits Twitter’s popular “trending topics” summary of the top 10 newsworthy events or celebrities or topics that users are searching Twitter to find at that very moment.
3. Insert a promoted tweet. These tweets appear in the user’s feed, alongside tweets by others whom the user expressly seeks to follow. They also can be personalized to some extent, in that they reflect search terms entered by the user (e.g., a search for “cool tech” returns, before any other content, an advertisement from Verizon Wireless, touting its latest smartphone deal).

Despite the effectiveness and appeal of these simple approaches—it is projected to earn $950 million in revenues from these three types of ads in 2014—Twitter now is preparing for its initial public offering. In this process, it is taking a few steps that suggest it might be adding a bit more complexity to its advertising strategy. Twitter recently purchased MoPub, a company that specializes in inserting marketing messages into mobile applications through an auction mechanism. Other predictions indicate that Twitter will seek to diversity its market, moving beyond its predominant appeal to large, U.S. advertisers to increase its international advertising presence.

Source: Vindu Goel, “For Twitter, Key to Revenue Is No Longer Ad Simplicity,” The New York Times, September 16, 2013