Twitter Forming Partnership With Major Ad Buyer

Twitter is signing its biggest advertising deal yet with one of the world’s leading ad-buyers, the Financial Times reports, citing “people familiar with the matter.”

The deal with Publicis’s Starcom MediaVest Group is worth hundreds of millions of dollars over several years and reflects Twitter’s growing importance in media and marketing, as well as new thinking on its relationship with television.

“We think that the industry had been focused in the wrong area, which was making a decision between Twitter and TV,” Adam Bain, Twitter’s president of global revenue, told the FT. “That’s not what we believe. Twitter is a bridge.”

The contract marks a major advance for Twitter, Ad Age notes. While marketers have been using Twitter's real-time stream of 140-word missives, and some brands have built teams to interact on Twitter in real time, investment of ad dollars has been slight until now.

The deal, structured as a partnership, comes as people increasingly visit social networking sites and use mobile devices while watching television. A recent Nielsen study confirmed a strong correlation between increases in Twitter volume and TV ratings.

The alliance gives SMG’s clients, including Procter & Gamble (NYSE:PG), Walmart (NYSE:WMT), Microsoft (NASDAQ:MSFT) and Coca-Cola (NYSE:KO), access to preferred advertising slots on Twitter, research and data, and new products, such as an “In-tweet mobile survey” program that will let companies poll consumers for real-time opinions.

The deal comes just weeks before U.S. television networks sell about three-quarters of their commercial inventory in the annual “up front” market and is likely to put pressure on them to include more digital and social media offerings in their pitches.

“Twitter, in a very short period of time, has gone from an experiment to something that is essential,” Laura Desmond, SMG’s global chief executive, told the British newspaper.

“This signals to the marketplace how we want to conduct business and measure the implications. This is the future. It’s convergence.”

"Over the past few years, Twitter has been perceived as being in the 'experimental' budget, but SMG clearly doesn't think Twitter is experimental for them anymore," Debra Aho Williamson, analyst at eMarketer, told Ad Age. "They believe Twitter is a vehicle they need to be a part of on an ongoing basis."

The deal is not exclusive and does not preclude Twitter from striking similar partnerships with other marketing companies. It comes as Twitter unveils a flurry of new advertising products and plans to work more closely with TV networks.

SMG and Twitter will conduct research together on Twitter's impact on consumers and brands, including a "social TV lab" to study the relationship between Twitter and TV. "What we'll be able to do is get better consumer data, trend info and audience segmentation to feed into planning and modeling to make better decisions," Desmond said.

While the spending marketers commit to Twitter remain a fraction of the $205 billion they spend on television globally, budgets are shifting quickly. Twitter’s global ad revenues are expected to almost double this year, reaching $582.8 million in 2013 up from $288.3 million in 2012, according to eMarketer.