With Olympics backdrop, Twitter goes for gold in ad plans

In sharp contrast to Google, which initially built its businesses mostly by persuading thousands of small companies to buy "direct response" ads, Twitter's emerging strategy focuses on selling elaborate brand campaigns to major marketers such as Procter & Gamble Co and Verizon Communications .

The Olympics have presented a prime opportunity for Twitter to position itself as a new media channel that complements TV broadcasts - and carries the big-name ads to match.

"We can service the very biggest brands in the marketplace," Adam Bain, the company's president of revenue and key advertising strategist, said in a recent interview. "The conversation that's happening on TV, or happening live is also happening on Twitter. That's very valuable."

Courting major brands is an unusual play for a six-year-old company that private investors value at more than USD 8 billion but has yet to prove its financial viability. It often takes years to persuade the biggest advertisers to try a new publication or TV show, much less a completely new medium that requires a different creative approach.

The challenge is evident in Facebook's fitful efforts to woo marketers such as General Motors, which jolted the social network by pulling back from paid ads just before Facebook's IPO in May.

GM and Facebook are now talking again, and Facebook recently began a boot camp at its Menlo Park campus where marketers can meet with engineers to collaborate on ad campaigns. But as of 2011, brand campaigns still accounted for less than 40% of Facebook's USD 3.7 billion in revenue, according to estimates by eMarketer.

Even Google, which revolutionised direct response ads by showing them next to search results and has reaped huge profits in the process, has not fully cracked the code when it comes to big brands.

But the advertising giants say their early experiments with Twitter have shown remarkable results.

Consider the case of PepsiCo, which spent USD 640 million in 2011 on marketing, according to Kantar Media. Beginning late 2011, about a dozen Twitter staffers led by Bain flew to PepsiCo's offices in Purchase, New York, for a series of brainstorming sessions.

Armed with data gleaned from Twitter chatter, the two companies drew up a plan to use Twitter as a centerpiece for a massive rebranding campaign, "Live for Now," that tied the soft drink to pop music stars and played up its youth appeal.

As the campaign unfurled in June, Pepsi rolled out a series of music videos on its Twitter page based on which artists were most discussed on Twitter, and doled out downloads for hit songs. In late June, Pepsi threw a Katy Perry concert in Hollywood that was live-streamed within a tweet on Pepsi's Twitter page.

The company also paid Twitter to boost the reach of select "promoted tweets," which garnered 68 million impressions in one day.

About 24 percent of users who saw Pepsi's paid tweets clicked, replied to or helped broadcast the tweets - a rate that deeply impressed Pepsi.

"We saw some phenomenal results with those ad products," said Shiv Singh, the global head of digital marketing for Pepsi Beverages. Singh said it was "extremely likely" that Pepsi will ramp up its spending on Twitter.

WHERE THE BIG DOLLARS LIE

Twitter's focus on brand marketing, which aims to create a positive association with a product rather than prompt an immediate purchase, underscores a long-standing issue in the online advertising world.

About 60% of the total USD 150 billion spent on advertising in 2010 went toward brand marketing campaigns, according to comScore. But in the online world, the vast majority of the roughly USD 30 billion in ad spending went toward direct response ads that generate leads or drive sales directly.