Facebook didn't invent the mobile app install ad, but that hasn't stopped it from turning it into a business that is rapidly approaching $1 billion in revenue annually — and it isn't stopping Twitter from going after the same cash cow.
Twitter said it is launching its own mobile app install advertising product today, which will allow app developers to sell advertising spots in the Twitter app that link directly to the app on the App Store and Google Play to install it. Twitter will also serve the ads through MoPub, its advertising exchange that's used in a number of other apps.
The ads are a newly popular product, initially pioneered by mobile advertising startups like Flurry and TapJoy. But Facebook was essentially able to perfect it with much more efficient targeting, because Facebook is able to get a much better sense of its users thanks to all the information it has on them.
Mobile App Install Advertising proven to be one of Facebook's most lucrative new businesses. At the end of 2013, Facebook had already served 245 million mobile app install ads, as BuzzFeed first reported in February this year. Of those, 100 million came in the fourth quarter of the last year alone — meaning the business is rapidly ramping up.
And now Twitter wants a piece of it — for good reason, too. The company isn't picking up new users quickly enough to satisfy Wall Street's expectations and is still small in overall size compared to Facebook. While Twitter added 56 million users in the year between December 2012 and 2013, Facebook added 170 million users. It needs new and better ways to advertise to its users if it is going to continue growing its revenue. Investors skewered the company after its last earnings report when the newest user numbers came out.
Twitter has been searching for a way to prove to investors that it can build a strong advertising business outside of a niche product used by news junkies and celebrities. Many industry watchers will likely point to Twitter's data on its users, which might not be as strong as Facebook's when it comes to targeting. But for a heavily used mobile app like Twitter — which also sells ads through MoPub to other apps — it's an advertising product that the company would be silly not to try to replicate.
Update: Twitter and Facebook's growth numbers have been added for additional clarity.