Twitter lands ad agency partnership for major revenue boost

Twitter has struck one of its biggest advertising deals to date with media agency Starcom MediaVest Group (SMG), the companies said, in the social media site's latest effort to boost revenue.

The multi-year agreement, which includes preferred inventory and a direct pipeline into Twitter's data feed for media planning purposes, is worth up to hundreds of millions of dollars, according to sources familiar with the deal. They declined to be named because the transaction details are private.

"In about 18 months, Twitter has gone from an experiment to essential," said Laura Desmond, global chief executive of Starcom, in an interview about the partnership on Monday.

"The deal is about research and experiences on behalf of SMG's clients," said Adam Bain, president of global revenue at Twitter.

As part of the worldwide firm Publicis Groupe, SMG buys and plans media on behalf of clients ranging from Samsung Electronics Co Ltd <005930.KS> to Kellogg Co. The partnership marks a significant win for Twitter which has been courting Madison Avenue to expand its advertising business.

With 200 million users, Twitter has become extremely popular for its effective way of sharing short, 140-character messages. But the fast growing social media site now in its seventh year is furiously ramping up its ability to make revenue in the face of stiff competition from Facebook Inc and Google Inc.

Twitter is expected to generate less than $600 million in revenue this year, according to the research firm eMarketer.

The partnership with SMG culminated last fall after a strategy planning session between Desmond and Twitter Chief Executive Dick Costolo. SMG is making a push to connect traditional media buys like TV commercials and glossy ad pages in magazines with chatter on social media across the Web.

As part of the agreement, Twitter and SMG will co-create a virtual lab to research how people tweet and watch TV.

Twitter has also partnered with TV viewership company Nielsen to measure what people are saying on Twitter about TV shows.

Additionally, Twitter and SMG will launch a mobile product to survey users in real-time.

"We think agencies play a big role bringing interesting new ideas to the platform and we want to support that," said Bain, adding that Twitter plans to form more of these types of partnerships. "We want to create a great framework to measure."

© Thomson Reuters 2013