Twitter Advertising ROI Revealed: $10 CPM, Way Too Expensive

Some of you may remember the service Twittad - the one that lets Twitter users to sell their profiles to advertisers for them to use any graphical file as a background for our profiles for a certain time period. On the launch date the bloggers that reviewed the startup argued that the idea would hardly work because Twitter users rarely look at profiles of the people they follow on Twitter - usually we only check a profile once after we search for the person we want to follow or when we receive a following notification. Otherwise you rarely re-visit profiles - hence rarely see the background along with the ad this background contains.

I’ve been following the TwittAd blog since then and the guys seem to have come up with a solution to the problem the blogosphere suggested: once a profile is purchased by an advertiser, TwittAd will send an automated message on behalf of this Twitter user notifying all the followers (or only those willing to listen, to be more specific) of the fact that the profile is sponsored by a company X and inviting the followers to check the company’s website.

Today I have seen a case study published on TwittAd blog and could not help but take a look as it is still very interesting to me if such ideas of making money on Twitter actually have the chances to work. The case study describes one advertiser’s experience (pdf) working with the Twittad service by paying a total of $105 for 8 Twitter profiles.

The advertiser who was so willing to describe the experience was Sayso Mobile - a mobile advertising network that buys cell phone users to receive text messages from advertisers they work with. The ad they placed on the sponsored profiles contained an invite code for those new users that arrive from the Twitter campaign so that the company could see exactly how many people Twitter ads brought them.

Sayso calculated their return on investment using the number of followers all the 8 accounts they sponsored had and since the messages reached a total of 10,409 followers, the ROI amounted to $0.01 or $10 CPM (cost per mille as we usually think about online ads in terms of how many thousands of people are exposed to an ad). For anyone lacking knowledge in the online advertising business I have to say that at the rate of $10 CPM the company could easily buy impressions from top-quality technology blogs that could display their ads every time a visitor arrives to any of the pages - which definitely happens much more frequently than people watch Twitter profiles of the most proficient tech bloggers. What’s more, $10 CPM is considered to be a rather high rate so they could easily buy cheaper if they chose that medium.

In addition to that, the company also mentioned the number of new subscribers that registered using the invite code the ad on Twitter contained. And the number of people that checked the site and chose to register after they saw an ad on Twitter (or the promotional tweet from their friends) amounted to 21. Yes, that was 21 new subscribers generated with $105 investment - which translated into CPA (cost per action) of $5. That means that Sayso invested $5 to get every single new subscriber - not even an advertiser who would bring new money into the ad network but a simple subscriber who is here to get some cash from reading ads in text messages.

Honestly, given that the network actually pays its subscribers to read promotional text messages, I think a mere 21 new subscriber is no good - after all, what can be more appealing than doing basically nothing and getting paid for it? My idea is that the promotional tweet sent by all account holders was not very specific in what exactly the followers of these “twitter publishers” were supposed to see when checking the Sayso website and they did not really want to check something out only for the sake of it - if the idea of getting paid to read text messages was right there in the promotional tweet the number could be higher.

At that Sayso claims that traffic to the network’s website more than doubled during the campaign on Twitter. But I think it is no surprise since if something is very low (almost 0 - and neither Alexa, nor Compete show anything for SaySo Mobile website - which is an indication of a very low traffic to the site), doubling it will still amount to that same zero.

Unfortunately I am very disappointed after getting to know these results as I wanted to see something way more positive. But after taking a look at this case study my conclusion is that the results of running an advertising campaign on Twitter are not particularly good in terms of attracting new users. What’s more, the rate of $10 CPM is too expensive to consider good - and an advertiser could easily negotiate with a good relevant blogger to sponsor a whole blog for a week for that same amount. And something tells me that the results from an advertising campaign on a blog could be much more impressive.

Of course it may well be too early to judge but my opinion is that using Twitter profiles as advertising medium does not work at all while broadcasting paid tweets is better but hardly efficient when purchased in such small volumes. Probably if something similar was launched by Twitter itself, it could work due to the number of people that will be exposed to ads. But for now trying to buy ads on such a Twitter advertising marketplace does not seem like the most cost-efficient way to promote your website or services.