How Twitter Is Pairing Its Interest Graph With Ads

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With somewhat coincidental (?) timing, given this week’s Facebook Marketing Conference, a new article published today by Bloomberg Businessweek takes a deep dive into Twitter’s advertising’s business. Twitter is the other major social network after big brands’ ad dollars, and although its 100 million active members pale compared with Facebook’s 800 million+, there is the potential for a different kind of ad targeting arising on Twitter. The company is going after the “interest graph,” a concept we’ve covered in some detail before.

An interest graph is different than the social graph provided by Facebook, which looks at connections, likes, and detailed demographic data like hometown, age, education and more, in order to narrowly target specific groups with ads. Instead, the interest graph is about what you like, what you read, and, generally, what kind of person you are. But the question is, can Twitter get a better read on users’ interests and personalities than Facebook can?

After all, Facebook knows a lot about us already when it comes to the intersection of people and brands. We “like” advertisers’ pages, interact by posting on their walls, click through their links in our news feeds, and share their messages with our friends. Today, messages posts to our walls when we just read an article in an online news publication, or just installed a new mobile app. Plus, thanks to the introduction of Facebook’s Open Graph, which lets our external web activity show up in Facebook’s real-time activity feed in the sidebar ticker, our friends are seeing other interactions we engage in. Besides likes and comments, this section also shares details about the music we’re listening to (and the service used to do so), the games we’re playing (hi Zynga!) and maybe one day, what we’re watching on Netflix.

But Twitter is trying something different when it comes to targeting people with brands’ messaging. Twitter doesn’t know who you are, how old you are, where you went to school, where you live (unless you’ve volunteered that information or are geo-tagging your tweets), or any of those more traditional demographic details.

However, the thing that struck me about the article was the little piece near the end, where CEO Dick Costolo explains how Twitter is going after the interest graph. Bloomberg’s Brad Stone describes the data Twitter collects as “both revealing and noninvasive,” which seems like an accurate description.

“These accounts I follow paint a very compelling picture of the kind of person I am, even if it doesn’t paint a picture of exactly which uniquely identifiable individual in the world I am, Costolo explains. “I think that allows us to deliver powerful value to advertisers, and powerful value to those who want to speak freely.”

Developing an interest graph means that Twitter, instead of being able to (creepily?) go after all 20-year old Jewish women who live within 5 miles of New York, who have completed college and who are married, for example, can target a specific kind of person. Those who seem interested in politics, or tech, or celebrity news, or education, or art, or music. But building a good interest graph – one that doesn’t just think that because you follow Lady Gaga, you’re a fan of all pop music – is far more challenging.

Costolo doesn’t give Stone much to go on as to the specifics of how Twitter’s interest graph works (or Stone didn’t publish them), but he does say that Twitter is tracking things like who you follow and what you click on.

Today, Twitter has a suite of advertising products known as Promoted Products, which includes Promoted Trends, Searches and Accounts. A Promoted Trend goes for around $120,000 per day in the U.S., the article confirms. And the expectation is that Twitter is now on track to earn $260 million in 2012, according to eMarkter, using these tools.

But it’s all still very much in the early stages. Costolo notes that the company’s ad business is only 18 months old. “2011 was the year we began scaling it,” he said. “And 2012 is the year when we demonstrate that it’s a juggernaut.”

He also admitted that Twitter’s targeting tools aren’t as refined as Facebook’s. He’s not concerned, however, because he thinks he’s built the next big thing in terms of ad targeting. The interest graph. Over time, the algorithms behind Twitter’s interest graph could grow more refined, as it learns what we click, what we re-tweet, and maybe even things like the sentiment behind our words. Someone may tweet about Obama, but that doesn’t mean they support them. And since one of Twitter’s latest additions is a tool that lets politicians talk to Twitter’s users through Promoted Searches (search results that stay stuck to the top of the page), it would be incredibly helpful if, say, a candidate could go after supporters, non-supporters and on-the-fence sitters in different ways.

For now, though, the system is much more simple. Search for a candidate’s name, see his Promoted Search result. There’s a lot of potential here to make that system more refined, more exact, and generally more intelligent. If anything ever has a chance at competing with Facebook, it’s not going to be yet another social network mining the same demographic data in the same ways, it’s going to be a network that figures out how to mine new data in new ways – data that defines who people are by their activity, interactions and behavior. It’s going to be the network that figures out the interest graph. And Twitter is off to a good start.

Image credit: Research.ly, via Brian Solis