In April of 2009 Steve Ballmer announced he would be spending $80 to $100 million on advertising Bing. In the end, the number turned out to be on the high side of that range. In April, Bing’s market share hovered around 8%. By September, it peaked at around 9.5% before falling again as the ad campaign tapered off. There are lots of different stats and measurements of market share, but all told, in the end it seems that Ballmer’s $100 million got him about a point and a half of market share. The ads themselves? Reviews were mixed. Some were good, solid hits. Some were misses. I had several friends who worked on the campaign. None of them claimed to be doing anything groundbreaking or amazing. The campaign was widely believed to be a failure.
Google has about a 64% market share in US desktop search. eBiz MBA averages Alexa, Quantcast and Compete and finds that Google has about 1.1 billion uniques per month in the US, which would put one point of search market share at about 17 million monthly uniques.
So, then, in explicit terms, Steve Ballmer’s $100 million — spent in one calendar year — bought him a staggering 25 million unique visitors a month.
(I am simplifying these numbers for a larger point, excluding mobile, the rest of the world, but I doubt anything changes the main thrust of the argument.)
Never mind if they had actually made good ads.
What, then, would the stock market say to a Twitter earnings report that brought in 25 million new unique visitors? Last earnings report, they added two. The stock has jumped more than five points on even a mildly so-so earnings report more than once. One time it jumped ten, only to fall again when people realized oh, hey, the report wasn’t that good, because there really wasn’t much user growth. A five point jump in Twitter’s stock price is worth $3.3 billion in market cap at today’s stock value. Seems like that is a pretty good ROI.
(I am, again, being lazy with numbers, conflating MAUs and monthly uniques. I think. Details are fuzzy but the point remains. Say only half those uniques qualify under Twitter’s definition of “active,” which is probably something like 2–3 times a month, right?)
I empathize and agree with Chris Sacca’s product recommendations for Twitter. All indications are, despite the unique leadership issues going on, that Twitter is working on many of these innovations. Today, I was listening to a podcast with Fred Graver, an old friend and Twitter’s Creative Director for Television, in which he mentioned that Dick Costolo used to say Twitter needed a “DVR for Tweets.” What a great idea. Twitter is on it.
There seems to have been a period — normal in platform startups — where product innovation was stalled while the company focused on building the very real, very complex underpinnings of revenue and advertising delivery. I sympathize, and I’ve gone through that. It is hard. But that seems to be past. Twitter seems to be willing to make (relatively) bold product moves again.
But at this point, I doubt it will be enough. It seems to me that, among others, Facebook has Twitter directly in its sights, and they’re not the only one. At this point I wouldn’t be surprised if there were more employees at Facebook and Google (never mind the Chinese, Microsoft, etc.) trying to kill Twitter than Twitter has employees.
People advertise when they have a product they are proud of. The old adage that advertising can’t save a lousy product is true. Twitter’s product is great, and it is getting better. If it’s not time to tell the world just yet, if things are still a bit confusing, it is getting to be very, very close to that time.
Twitter is learning to tell their story. Ev did a great job synthesizing it at Fortune’s Brainstorm Tech conference recently. Was it perfect? No, but it’s getting there.
Twitter has advertised on TV before, or at least made TV ads. There’s another one I remember seeing that was a great sort of anthemic, inspirational piece. I can’t find it online anymore. But it was really good. Like many people who dip their toes into broadcast, it was too little media time, and maybe too soon. They used some people they knew personally (I hear), and didn’t really get some hard core, outside genius experts. By the way, that’s an amazing, great thing about the advertising industry — it’s doesn’t cost any more to hire a legend such as Lee Clow as it does anyone else. God bless good old American competition, amirite?
But Twitter is a different company now. They have the money, they have the product, they have the story, they have the mainstream potential. In advertising, that’s exactly when wide-spread, go-big TV advertising becomes something you should seriously consider.
I dunno about their cash situation. Maybe they don’t have $100 million a year sitting around. There have been some really interesting media-meets-startup deals going around lately. I’m horrified and awed by the recent FanDuel/Comcast and Disney/DraftKings deals. OMG where were those five years ago when I was still obsessed with this stuff? Maybe they could do something like that? I am not the expert here, but I suspect they could find a way.
(Honestly, by the way, it should be more like $200 Million. A Year. Ballmer’s big failing wasn’t the attempt, it was that he gave up so soon. Most empirical research on advertising says that’s cumulative, with increasing effects over multiple years. That was another funny thing when the tech press was getting all apoplectic about Microsoft’s Bing campaign being so big. To those of us who have worked on big national TV campaigns, $80 million isn’t all that.)
(It should also be noted that these deals did not put off stockholders in the public companies or investors in the private ones — I am unaware of any major investor in Twitter that would freak out if they spent a normal percentage of revenue on advertising that other large, publicly traded companies do. Maybe they’re out there and I’m unaware.)
There’s one final reason Twitter should start advertising. It’s been a massive cognitive dissonance operating at the heart of Silicon Valley for years, but the hypocrisy is, of late, becoming more acute. It used to be that large platforms didn’t do big national TV ad campaigns because to do so would bely a lack of belief in the ad power of their own platforms, and that would put off big advertisers. But now, the fact that platforms barely advertise at all belies a lack of faith in the power of advertising. And that ought to give advertisers even more concern.
Two final warnings: don’t hire a “Silicon Valley friendly” advertiser (which, sadly, excludes myself). Hire a legend. And do something interesting with media. Fund something amazing. Go all out. Hire someone totally awesome to run it, like Air BNB did when they hired the wonderful Jonathan Mildenhall. Talk about being smart in the long game.
So if you want to see some real daring at Twitter, let them advertise. Sure, the Valley press will call it lame or boring or desperate or whatever. But you know who won’t? Investors. And you know what? It will probably even work.
Published in Startups, Wanderlust, and Life Hacking