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Twitter gets personal with buyout of ad-tech disruptor TellApart

April 28, 2015, 9:19 PM UTC
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Twitter wants to make it simpler for digital advertisers to get personal with potential customers. What’s more, it doesn’t care much whether prospects are using a Web browser or a mobile device to research a purchase. Or both.

The social network plans to pay an undisclosed sum for TellApart, a six-year-old marketing software company that drives “hundreds of millions in annual revenue” for retailers like Neiman Marcus, Brookstone, Pottery Barn, and eBags. If all goes as plans, the deal should close by June 1.

TellApart is a specialist in personalized, predictive marketing: it is one of Facebook’s remaining Facebook Exchange partners, after the social network cleaned house and started focusing elsewhere. Its technology tracks Internet browsing behavior and serves up advertisements accordingly.

Yes, it’s the seemingly mysterious, sometimes annoying science behind the not-so-subtle nudges that a digital shopper receives after checking out an e-commerce site and leaving without buying anything. TellApart works on a pay-for-performance model, taking a cut of purchases that ad targeting inspires.

Perhaps not so ironically, Twitter CEO Dick Costolo was an angel investor in TellApart, which managed to raise about $17 million before this exit. The company has made two acquisitions of its own: Freshplum (e-commerce personalization) and AdStack (software for website testing).

Twitter categorizes TellApart’s software as a natural extension of investments it has already made in targeting services. It wants to make it simpler for marketers to reach audiences as they move between mobile devices and desktop applications.

“Direct response advertising has been a major growth engine for our ads business over the last several quarters. “We’re confident that TellApart will accelerate that trajectory further,” says Twitter senior vice president Kevin Weil, in his commentary about the deal.

For its first quarter, Twitter reported $388 million in advertising revenue, up 72% year-over-year. For perspective, total Q1 revenue was $436 million. Mobile accounts for 89% of total ad sales.

Also contributing to his confidence: Twitter’s new partnership with Google’s DoubleClick group. The new relationship will allow advertisers who use DoubleClick to measure when conversions are inspired by Twitter activity. It will also make Twitter inventory available for purchase through the DoubleClick Bid Manager.

“One of the biggest challenges facing marketers today is the fractured nature of the consumer experience—across devices, between the Web and apps, and between the digital and physical worlds,” echoes TellApart co-founder and CEO Josh McFarland in a blog about the deal. “While there are no silver bullets to solve this problem for advertisers, we believe that by working together with Twitter we can considerably improve the experience. On desktop, advertisers on our platform reach the right consumers at the right moments, and working with Twitter, we’ll be able to do more for our advertisers to find the right consumers on either mobile, desktop or both.”