Comment: What Twitter's IPO will mean for retail advertisers

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Twitter has become the latest big name in tech to announce plans to list on the stock market. Following Facebook’s IPO earlier this year, Twitter is said to be hoping to raise $1bn when it floats on the New York Stock Exchange (NYSE).

This presents an interesting situation for the platform and its advertisers. Shareholders demand profit, so Twitter is going to have to make some big changes which are likely to affect how retailers use the platform. For example, there has been much discussion around the launch of new ad formats and perhaps even (whisper it) a relaxation of Twitter’s definitive 140 character limit in order to attract more advertisers.

One major change which should interest retailers is the introduction of ad retargeting, which is designed to ensure that users are shown adverts which are more relevant to their interests. The premise is simple: if you sell gardening supplies, you don’t want to pay to advertise your products on Twitter to an 18 year-old with no interest in gardening.

But it’s not quite as simple as joining up the dots between users’ interests and retailers’ products. For example a retailer’s data might show that a certain consumer has been browsing pillows on their website, causing that customer to be served with ads for those pillows while he or she continues surfing. But what if that customer already bought one of the pillows? This isn’t always reflected in less sophisticated approaches to retargeting, so again retailers are back to square one: wasting budget and potentially annoying their customers by showing display ads or promoted tweets to users who aren’t interested in that product.

Retailers should look for an intelligent retargeting approach from Twitter before deciding to increase ad spend with the platform. Major brands like Topshop, Waitrose, Waterstones, and ASOS have cultivated large and valuable Twitter followings by engaging customers to foster long-term relationships. Poorly targeted, “mass-market” promoted tweets are likely to annoy users and damage the engagement that retailers have worked hard to build.

For Twitter to attract increased ad spend from retailers, it’s going to have to prove that it can use data intelligently to target ads at the right customers to grow retailers’ revenues.