It is a known fact that Twitter Inc's (NYSE:TWTR) scale and deeply engaged user base create valuable opportunities for advertisers to leverage the platform. Now, the company plans to generate dollars not only of its own mobile apps but also from its recent acquisition of MoPub.
When Twitter agreed to acquire MoPub in September 2013, it was hailed as a sensible move. MoPub is a mobile advertising exchange which Twitter plans to integrate with its advertising platform. The new platform allows real-time bidding so that advertisers can more easily automate and scale their ad purchases. Now, the acquisition is started to bear fruit by churning out innovative products.
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MoPub released the first programmatic-enabled native ads platform for mobile apps. Native ads are one of the most talked about topics in advertising, but there has yet to be a scalable and accessible solution for mobile app developers.
Native ads offer an opportunity to monetize an app more effectively by matching the original content's look and feel maintaining the same positive experience for the users. However, MoPub said there has yet to be a scalable and accessible solution for mobile app developers.
MoPub's native ads product gives its customers the ability to work with direct advertisers, promote their own features and apps, and drive more revenue from one of the over ninety-five demand partners on MoPub Marketplace. This single solution helps customers provide a customized ad experience for their partners without building custom campaigns for each advertiser.
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The timing of the product's launch is significant as U.S. native-ad spending on social sites is expected to hit $2.36 billion, or 39 percent of total U.S. paid social ad spend this year, according to market research company BIA/Kelsey. The report forecast that social native ad spends will grow 93 percent to $4.57 billion by! 2017.
MoPub's Native Ads enables users to drive more revenue immediately from advertisers through MoPub Marketplace even without direct sales relationships and drive more revenue with direct advertisers. Now, the app developers should be able to place ads automatically in their mobile apps rather than building them piecemeal.
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Publishers can also leverage MoPub's native ad solution to promote their own content. Even if they aren't ready to introduce ads into their app, native ads offer an excellent opportunity to market new features, drive installs for their other apps, or highlight other parts of their business within their app's natural flow.
Twitter has 232 million monthly active users and 100 million daily active users, who collectively create roughly 500 million tweets per day. According to eMarketer, the worldwide digital advertising industry will be around $118 billion in 2013, up 13 percent. By 2017, this industry is expected to grow to $173 billion, CAGR of 11 percent from 2012-2017.
Within this, the mobile advertising industry is expected to grow the fastest—CAGR of 48 percent from 2012-2017. Twitter, with its focus on mobile, finds itself well positioned to capture this strong growth trajectory of the industry.
Twitter generates almost all of its revenue from serving advertisements to its 232 million users, and more than 70 percent of which are on mobile devices. MoPub has been the intermediary in matching advertisers to ad space on mobile apps.
The company plans to grow MoPub's current business and to use MoPub's technology to build real-time bidding (RTB) into the Twitter ads platform. UBS analysts expect U.S. RTB display advertising to grow 70 percent in 2013 to $3.3 billion and believe it can reach $10.3 billion by 2017.
As such, MoPub should help Twitter maintain exposure to this growth area within digital adv! ertising.! Twitter's MoPub acquisition should allow the company to build RTB capabilities into its ad platform.
At present, MoPub is generating only a small amount of revenue relative to Twitter (it would have comprised less than 1 percent of Twitter's revenue in 2012), but it is growing quickly (MoPub's first half of 2013 revenues were up 142 percent versus its full year 2012 revenue) – benefiting from increased bids and higher pricing.
Longer term, MoPub could also serve as the foundation for a Twitter ad network, which could materially change the trajectory of revenues for the business.
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