Why Twitter’s TellApart Fell Apart

When a public company is having performance issues, it needs an excuse. For Twitter, TellApart is shaping up to be that boogeyman.

After barely a mention of TellApart on its earnings calls for several quarters, last week Twitter CFO and COO Anthony Noto implied that the remarketing platform will hurt revenue through the rest of the year.

But TellApart isn’t to blame for Twitter’s systemic monetization problems.

“How do you have a headwind for something that you’re not selling, you’re not paying attention to and not apparently using?” said Jay Friedman, COO at programmatic media planning and buying company the Goodway Group.

When Twitter acquired TellApart for $479 million in 2015 – its largest acquisition to date – the stated rationale was to drive revenue by giving its own direct-response business a shot in the arm.

Yet, direct response was never a part of Twitter’s core business, and investing in DR put into stark relief the mismatch between TellApart’s performance business and Twitter’s growing focus on brand advertising dollars, on display at its first-ever NewFronts presentation on Monday.

When media companies try to build a tech stack through acquisition, the result often is “at cross purposes with their true competitive advantage,” said Rob Schneider, GroupM’s head of corporate development.

Twitter’s true competitive advantage is the unique, real-time inventory on its platform, which generates brand awareness more than clicks, Schneider said. Off-platform reach was never Twitter’s strong suit.

As the odd duck in Twitter’s stack, it doesn’t appear that TellApart was ever fully integrated either from a technology perspective or as part of Twitter’s sales story.

“You can’t just buy a piece of technology and expect it to generate revenue without ongoing innovation,” Friedman said.

But even with more nurturing and support, the TellApart deal was ill-fated. The last thing you want to do with a premium publishing property is put it on equal footing with everything else in the marketplace, said Adam Heimlich, SVP of programmatic and the managing director of Horizon Media’s HX division.

A similar dynamic played out when Facebook bought then shuttered the video SSP LiveRail, citing fraud and viewability issues.

“And that’s what the LiveRail decision amounted to,” Heimlich said. “Maybe that’s what happened here. Twitter thought they were going to connect to the rest of the DR world and then they realized that it’s a race to the bottom.”

Some brand dollars are shifting to performance, but scaled players like Facebook and Criteo dominate the space. Being “third or even a distant second is a tough spot to be in,” Schneider said. Performance cares about bottom-line results, and that’s pretty much it.

TellApart’s tech didn’t help Twitter sell its traditional DR formats, like Promoted Tweets, which aren’t revenue drivers. And while Twitter piloted dynamic ads using TellApart in 2015 and ran a limited test of ads driving website clicks and conversions in mid-2016, Facebook’s Dynamic Ads product has been on the market since 2012.

It’s hard to tell if TellApart’s failure to gain traction with the buy side was the chicken or the egg on its road to obsolescence. But the fact is, Twitter’s sales force wasn’t actively pitching TellApart’s charms. At least, Goodway Group’s Friedman doesn’t recall Twitter bringing up TellApart during any sales calls.

The same was true with MoPub, the mobile SSP Twitter acquired in 2013. Twitter’s salespeople aren’t tasked with selling anything other than the Twitter platform, Friedman said.

In the end, lateness to market combined with uncertain positioning on its DR strategy didn’t prove to be a compelling proposition for advertisers and agencies.

“But now Twitter appears to be moving away from something that ultimately wasn’t enhancing their core offering,” GroupM’s Schneider said. “This was a distraction for their business.”

In response to a request for comment, an official Twitter spokesperson noted that the company is “always experimenting with our support model and how best to meet our advertiser’s needs. At this time, we are shifting some advertisers to our self-support solutions so we can better allocate our resources.”

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1 Comment

  1. Allison, I don’t think Twitter is using TellApart as an excuse. Nothing could be further from reality. Sure, Twitter has enough problems on its plate mostly related to user growth and active users (same lack of focus on core metrics hurt Yahoo), so why deal with an underperforming asset that has terrible economics and will never produce a profit? AdEx posted an article last week on how the high cost of ad tech infrastructure/bid volume is too much for most DSPs to take. This is a totally nuanced because it has to do with marginal cost advantages. Also, TellApart sold run-of-the-mill retargeting, so maybe too many customers figured out that no incremental gain was happening. Add the two issues together and you have a customer attrition nightmare — e.g. sales people do whatever it takes to close to new customers, but they die off after one or two campaigns. There are only so many advertisers out. If they are not satisfied, they take their money elsewhere. In any case, I hope Twitter focuses on continuously innovating its core product and growing the core metrics — the same ones that FB and Snap rely on to self-sustain and grow.