The holiday season is always the biggest for ad-driven companies. This is Twitter's first holiday season as a public company, and it hopes to prove itself to advertisers and investors.
J.J. Hirschle, Twitter's first executive responsible for encouraging retailers to advertise on the microblogging service, was gearing up for a bigger milestone. Since ads sale is especially important during the most lucrative shopping season of the year. Hirschle has held meetings with Best Buy, Target and other potential clients, pitching Twitter as a platform for product marketing.
Hirschle's mission is urgent. Twitter lags behind Facebook in dollars flowing from retailers, which are the biggest digital-advertising spenders and are critical for the company to win over after its blockbuster IPO.
Facebook, the social giant, is also aiming big. Facebook is expecting to draw 70 percent of social spending versus Twitter's 30 percent. Both companies are pushing for a bigger piece of a growing pie, trying to snag last-minute spending by promoting their advantages and encouraging innovative campaigns that showcase their tools.
Twitter says the number of retailers using its ads has nearly doubled since last fall. Last week, the company unveiled a study that found users spend more money around the holidays and turn to Twitter to research products and deals.
Retailers generally run campaigns on both Facebook and Twitter, and also increasingly on Pinterest. Though all three will surely increase their ad revenue this holiday season, Twitter and Pinterest's growth will be more dramatics as it's coming off a smaller base.
Hirschle faces significant challenges in his new role: retailers who have paid for social media ads prefer some of Twitter's rivals. 34 percent said Facebook, 28 percent said Pinterest, 19 percent said Instagram, and only 15 percent said Twitter.
The experience of online-marketplace company Etsy encapsulates some of the hurdles confronting Hirschle. "Twitter as a public company is going to have to try to figure it out," Dickerson said. "I could definitely see them grow, but for right now they're definitely smaller than Facebook and Pinterest."
To keep up with the competition, Twitter has ramped up retailer outreach in other ways. In August, the company hired Nathan Hubbard, the former president of Ticketmaster, to help make it easier for users to shop via its 140-character tweets. In September, Twitter also agreed to acquire MoPub Inc., a mobile-advertising exchange, to sell ads around the Web.
Facebook with a Head Start Strategy
Facebook aims big. The company has had a head start staffing up and organizing to work with retailers. The social network, which with more than 1 billion registered users, about five times the number of users as Twitter, added four more ad products this year with retailers in mind. Facebook hired Nicolas Franchet away from eBay more than a year ago to be its retail marketing head, joining Steve Biddle, who heads retail ad sales.
"Our product suite is much more advanced than a year ago," Franchet said. "The landscape has completely changed, to the point where we're advising retailers to build an ecosystem between Facebook and their sites."
Elizabeth Francis, CMO of Gilt.com, said the online retailer spends more on Facebook than any other social media platform. Even so, it uses Twitter to have customer-service conversations and Facebook as a driver of traffic and sales.
"For Twitter, it's really about the real-time conversation that's happening on the fly," said Francis, whose company has been advertising on both sites since 2010.
Martin Sorrell, CEO of global advertising firm WPP, said he sees Twitter as "primarily a public relations medium." By contrast, Facebook is "a wonderful long-term branding medium," he said. "It will soon be the largest country on the planet if you think of it that way."
Facebook is looking to build on its leadership position. The company posted a "Facebook for Business" blog stressing its strength in mobile. It details how retailers use targeting tools to reach existing customers and find new ones, and stay connected to shoppers through the holidays by using ads to entice them to download an app.
Facebook worked with Target, an American retailing company based on Minneapolis, to develop its Cartwheel deals app and integrate it into the social network. The mobile app is expected to generate $100 million-plus in incremental sales.
"We know the Target guest is a really digitally enabled guest," said Jeff Jones, Target's CMO. "We have nearly 23 million Facebook fans, and so we knew it was a great large-scale platform for us to partner with. We took that partnership to a whole new level by co-developing this app with their engineers, and that ... was really special."