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Monday, September 9, 2013

Twitter Plans to Sell Ads for Other Companies With MoPub Acquisition

Twitter has been focused on building up a business selling advertisements that blend into the flow of 140-word messages that make up its social network.

Now it plans to sell similarly unobtrusive ads on other companies’ mobile apps, too.

Twitter announced on Monday that it had acquired MoPub, a mobile ad technology firm whose offices are a short bike ride from Twitter’s San Francisco headquarters. Neither company disclosed the price, but a person with knowledge of the deal said it exceeded $300 million.

MoPub offers a variety of services. But two are of particular importance to Twitter, which is trying to rapidly increase its advertising revenue, estimated at $583 million in 2013 by eMarketer, ahead of a probable initial public offering of its stock next year.

One is MoPub’s system for allowing advertisers to bid in real time, in an automated fashion, for ad space on mobile apps. Twitter plans to use that technology very quickly to automate bidding for ad space on Twitter.

Currently, Twitter ads require a high level of manual intervention by advertisers, which must adjust various parameters for targeting the ads, such as keywords and the age or interests of the Twitter user.

Advertisers, especially large ones, want a faster, simpler process.

“To whatever extent Twitter can make it easier for advertisers to buy ads on Twitter, that’s good for Twitter,” said Debra Aho Williamson, principal analyst for social media at eMarketer, a research firm.

The second, and longer-term play for Twitter, is MoPub’s role as a matchmaker between advertisers and mobile application developers. The company helps manage the process of placing ads within apps, such as games.

Twitter plans to continue and expand that business, giving Twitter its first foothold outside its own microblogging service and potentially opening up a new stream of revenue for the company.

“We are going to continue to invest and extend MoPub’s existing business, and that means selling ads in other apps on iOS and Android,” said Kevin Weil, Twitter’s vice product of product for revenue, in an interview.

Twitter even plans to work with MoPub to design new “native” ad formats that resemble the content they are appearing in. So a game might feature a level sponsored by an advertiser, or sell in-game items with an marketer’s logo.

“In addition to investing in new capabilities for our publisher platform, we believe there are opportunities to bring better native advertising to the mobile ecosystem,” MoPub’s chief executive, Jim Payne, wrote in a blog post announcing the sale of his company.

Brian Blau, a research director at Gartner who studies social media, said that the purchase made Twitter a bigger player in online advertising. “It will help give them access to advertisers they don’t have yet,” he said.

And that’s important as the company considers an I.P.O., Mr. Blau said. “They need to make sure they are firing on all cylinders.”