Twitter has signed a deal thought to be worth several hundred million dollars with the advertising giant Starcom MediaVest Group (SMG).
SMG are owned by Publicis Groupe, who boast the likes of Coca Cola, Microsoft, and Walmart among their portfolio of clients. The deal is the biggest of its kind for Twitter and represents a huge amount of advertising revenue for the social media giant. It also represents the micro-blogging platform’s belief that convergence with TV advertising will prove the driving force behind their future success.
The Financial Times reported on Monday that the deal had been struck and while the two parties, Twitter and SMG, were unwilling to discuss financial details of the deal it has been widely reported that Twitter will receive hundreds of millions of dollars. In exchange, SMG will receive preferential placement and other preferential treatment when it comes to certain features.
As part of the deal it is also believed that SMG will gain preferential access to market data that could prove very useful in their marketing efforts. It seems likely that a direct feed will integrate data directly from Twitter into SMG’s own system. This will allow for highly targeted marketing messages and adverts to be displayed according to SMG’s requirements. It will make it possible, for example, for SMG to be able to target an ad at a very specific demographic such as a precise age or geographic location.
The deal will further concentrate on the connection between watching TV and tweeting and the two partners will create what is being dubbed the Social TV Lab. This platform looks at how people watch TV and send updates to their Twitter accounts and it will enable both companies to benefit from the information and data provided.
Not only does Twitter benefit from the injection of cash but it also gives credence to their argument that they are a viable advertising and marketing platform for businesses. Even Facebook has struggled to turn their massive user base into serious financial gains, as evidenced by their recent flotation on the stock market.
It is believed that Twitter aims to float at a later date and this increase in revenue will certainly help, especially if more advertising agencies are prepared to come on board. The deal between the social network and one of the world’s largest advertising giants could lead to an opening of the flood gates and a massive surge in Twitter profits.
