Is Twitter Inc Failing To Drive Sales For Advertisers?

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Twitter ads allow companies to manage web users give by their email address, but there is no feature that allows them to determine how many customers purchased something after seeing ads on Twitter. Clothing retailer Bonobos identified the problem and has decided to cut down the amount it spends on Twitter ads since last August, according to a report from The Wall Street Journal.

No real world business

“[Twitter] is still in the process of proving out return-on-investment,” said Craig Elbert, Bonobos’s vice president of marketing. “We’re continuing to test.”

Bonobos is not the only marketer facing this issue. There are other marketers and ad executives who are skeptical about the worthiness of Twitter’s platform. Although these marketers are happy with the fact that ads are seen by a lot of Twitter’s monthly actives user base of 302 million, they are not satisfied that these ads deliver real-world business results. This, according to some marketers, discourages them from spending more on the platform.

HiLine Coffee, a New York-based coffee brand and online retailer which has used Twitter ads for some time, concluded that it was very challenging to increase sales, says the report. Following this, HiLine arrived at the conclusion that it will put its advertising dollars with other online ad vendors on such as Facebook and Google.

What Twitter needs to do

Demand for direct response ads was cited as the major reason for a drop in revenues by the micro-blogging site. Marketers pay Twitter for these ads only when users click on the app, install it or follow the account. Though the option of paying only after certain specific actions was liked by advertisers, for Twitter, it contributed to its revenue shortfall, says the report.

These issues were reflected in the company’s first quarter results, in which it posted disappointing revenue and current quarter outlook. Since then, Twitter shares have dropped 25%.

Twitter executives now need to establish that the platform’s direct response ads can give good results. There are companies expecting positive returns on their investment, which they believe are likely to come from more mature online ad outlets like Google and Facebook, as it is simpler to calculate the performance of those companies’ ad products.

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