Twitter Has Opened an Office in Hong Kong, but It Isn't Looking for Users

How will Twitter, one of the world's largest social networks, sell advertising in China?

We talk about Twitter all the time, yet we still can't get onto it. In March this year it opened an office in Hong Kong. Last week it showed up again, in a different way, at CES Asia. The consumer electronics show, held every January in Las Vegas and the year's big gathering for the smart-device industry, opened its first "branch" this year and chose Shanghai as the venue.

Instead of a booth, Twitter put up a giant poster and hoped visitors would make their way to the 38th floor of the nearby Kerry Hotel Pudong, Shanghai. After the noise of the show floor, it was quiet up there. A conference room of a few dozen square meters had been carefully dressed, with Twitter's little blue bird appearing in all sorts of forms. The most eye-catching touch was the door, wrapped in an old-fashioned vermilion red and studded with large copper ingots, a sign of how sincerely Twitter wants to approach the Chinese market.

"But Twitter hasn't truly entered China. The way we're entering the Chinese market is by advertising overseas for Chinese companies, helping them expand into overseas markets," Peter Greenberger told QDaily in an interview in that conference room. In other words, Twitter has come to China to find advertisers, not users.

Greenberger was appointed general manager for Greater China last September. He spent more than 10 years working on political campaigns. In 2014, for example, he was campaign manager for Brad Carson, now the Under Secretary of the U.S. Army, in his run for the U.S. Senate in Oklahoma. During the Clinton administration he was director of congressional communications at the White House Office of Legislative Affairs.

"But I think I got this job more because of my four years at Twitter. I know how to deal with advertisers," Greenberger said. "Still, I've found doing it in China quite challenging. You know, they're every bit as sharp as politicians."

Peter Greenberger, general manager of Twitter Greater China

Twitter was founded in 2006 and listed on the New York Stock Exchange in November 2013. It has never been short of trouble: how to make money from a huge user base; the slowdown in new-user growth once it started selling ads; the speculation set off by the departures of many founding executives; and investors' distrust, visible in the share price. Still, in 2014 Twitter's revenue topped 1.4 billion US dollars, 90% of it from advertising.

Now, "Twitter has more than 500 million registered users worldwide, 302 million monthly active users, and 185 billion tweet views per quarter. 66% of followers discover new products on Twitter, and 62% of users tweet about their shopping." These figures are printed in the brochure Twitter brought to Shanghai, and whether it is talking to prospective clients, advertising agencies or the media, Twitter is happy to cite them.

But Twitter is not the first company to court Chinese advertisers. Facebook, another site we can't get onto, is already building this business. As for Google, which we later lost the ability to search with, it has been in this business in China for 7 or 8 years. QDaily has reported that the business brought it 6 billion yuan in revenue last year.

How will Twitter compete with them for the same market and the same clients? How does it balance advertising products against user experience? Does it have a timetable for truly entering the Chinese market? How is the Hong Kong office doing so far? Here is how Peter Greenberger answered.

What business does Twitter want to do in China?

QDaily: Why did Twitter choose this moment to build an advertising business in the Chinese market?

We haven't truly entered China yet. The way Twitter is entering the Chinese market now is by placing ads overseas for Chinese companies. The timing is right, because we see a vibrant market. One very important point is that many Chinese companies now have big ambitions abroad, and they're actively looking for new users in overseas markets. Millward Brown, the marketing and brand consultancy owned by WPP, recently released data on Chinese companies' overseas revenue that also excited us. Overseas markets now account for 62% of Lenovo's revenue, 53% of ZTE's and 12% of Alibaba's, and many other companies are expanding abroad too.

Also, according to eMarketer, China's mobile advertising market tripled in 2014 to 8.21 billion US dollars. In fact, just before this interview I met someone from a local advertising agency. He thinks the biggest difference between China and the West today is mobile, and that the gap is widening, not narrowing. Asia as a whole, and China especially, has gone further on mobile, and I think the pace will keep picking up. That really excites me. 80% of Twitter's users come from mobile, and mobile brings in 90% of our revenue. Asia is our fastest-growing region, and we have high hopes for the Chinese market too.

QDaily: Why did Dick Costolo (Twitter's CEO) put you in charge of Greater China revenue? Does it have anything to do with your political sales experience in Washington?

Well... (laughs) I think it's mostly my experience at Twitter. I've worked here for four years, and I know very well how to work with brands. As for what selling ads at Twitter has in common with political campaigning, I think both depend on "real time response." You know? I think political advertisers are a lot like Chinese advertisers. They're both very sharp, and they ask for a lot.

QDaily: So which do you find harder to deal with?

I'd say doing business with Chinese advertisers is as hard as a U.S. presidential election.

QDaily: Why is it hard?

Partly because we can't actually reach Chinese users. In many markets Twitter doesn't need much explaining, but in China we have to do a great deal of market education. Also, compared with American advertisers, Chinese advertisers are very strict about how success is measured, and they want everything broken down into steps that can be carried out. They're very price-sensitive and care a great deal about measuring results. That is a real challenge.

QDaily: In general, how much do Chinese companies spend on advertising on Twitter?

Ha, not enough. Marketing budgets for Twitter sometimes come out of digital marketing, sometimes out of social marketing, and sometimes out of the mobile budget.

What encourages us is the growth of digital marketing in Asian markets, especially China, and the share of budgets going to digital marketing is rising too. And we believe that if users spend more and more time on mobile devices, more digital marketing money will shift to mobile. In a sense, Twitter is a provider of mobile marketing solutions.

QDaily: Which Chinese companies do you hope to sign as clients?

The first group is app developers. Their need for growth is obvious, the app economy exploded last year, and for Twitter this is an important business. The second is travel companies. That makes sense, because travel is popular all over the world now, so airlines, hotels and the like are our target clients. The third is media and entertainment companies. Then there are fast-moving consumer goods, and of course technology companies such as Alibaba, Baidu and Tencent.

QDaily: Which clients do you have already?

Well, I can't give you our full client list. They include Huawei, Alibaba and Meitu, among others.

QDaily: How did you win them?

We started this business around the end of 2014. Some clients came to us, and we also approach brands and agencies ourselves. Most of the time, advertising agencies bring us clients who are interested in Twitter, or recommend clients they think would suit us. Educating advertising agencies matters a lot to us. It's the best way to grow your business, because an agency can bring in a great many clients, so we're building good relationships with both global and local agencies.

QDaily: What do clients ask you most often?

First, how to create good content. That's hard. Your content has to be timely and has to resonate culturally, because your target consumers might be American, or they might be Brazilian or Indian. Second, how to refine their target audience. There are many ways to do that, such as by keyword, gender, device or interest. Third, price, which is often a very important question.

What they most want to know is how to use Twitter well: how to write good content, which format works best, and how to target the most users. On the whole, their questions are very specific and very practical.

QDaily: Is it a challenge to talk price with Chinese clients?

We're actually transparent about it. It often comes down to your expectations. First we ask about the marketing goal. Our prices differ from market to market around the world, depending on the local CPI. Japan, for example, may be expensive, and Indonesia relatively cheap. Then we run a budget test with the advertiser and optimize from there. The more clearly we understand an advertiser's goals, the better we understand their budget.

How will Twitter take on Facebook, and especially Google, in this business?

QDaily: I assume you know that in overseas marketing for Chinese companies, Google has been doing this business in China for 7 or 8 years, and Facebook has started too. So how will Twitter deal with the competition?

You're right, but we actually see that as an advantage. What Twitter is doing is indeed not brand new. As you say, Google and Facebook are doing it too, and they started earlier than we did. I think they've done a good job of preparing the market. Twitter offers a new choice. Everyone follows the same strategy, and some companies have already got results from other digital media platforms, but they also want more opportunities and more channels to reach more consumers around the world.

QDaily: Do you think Twitter can win?

Ha, at Twitter we love the hashtag "#win." I think Twitter can be part of the solution that helps these companies win. We're eager to sit down with them and help them win. Twitter is a highly interactive media platform, and, more important, we're real time, so we think we can help clients reach more potential customers and engage with them more deeply.

QDaily: So you think being real time is Twitter's biggest advantage?

Yes, I think it's one of the main ones... When we talk about Twitter, we like to make four key points. The first is "Live." It's the only real-time platform and is very well suited to events: you can reach your consumers at the right moment, especially when they're talking about something specific.

The second is "Public." Other platforms don't have this, and it's also attractive to brands: because the conversation is public rather than private, it isn't strange for a brand to join in.

The third is "conversational." We strongly encourage conversations across borders and brands, and between people who don't know each other in real life.

Finally, there's "mass distribution." What happens on Twitter doesn't stay on Twitter. It isn't like Las Vegas (what happens in Vegas stays in Vegas). You may get mentioned on other websites, you may end up on TV or in print...

We don't see any other social platform or app that is real time, public, conversational and mass-distributed all at once the way Twitter is, and that's what makes Twitter unique.

QDaily: Do you have specific examples of Chinese companies marketing on Twitter?

Huawei is one. They were very active at MWC, an event in Barcelona. It isn't the World Cup, but if you follow mobile devices, it may as well be. While people were thinking and talking about these topics, it was a very clever way to get to know opinion leaders and people who care a lot about technology. At the event in Spain, Huawei used location data to find these people. That's one example.

I think that as we go forward, we'll see more and more Chinese brands taking part in (brand promotion around) football tournaments, the Olympics and global events, and more and more Chinese companies entering this space.

After launching so many ad products, has Twitter lost sight of its original purpose?

QDaily: In 2009 Twitter's strategy was to be "the pulse of the planet." Since 2010 it has started making money and launched many ad products. Has Twitter's strategy changed?

The most fascinating thing about Twitter is watching people tweet every day about what they're doing, what they're thinking and how they feel. We bought a company called Gnip, which is "Ping" spelled backward. It does data analysis. It analyzes the 500 million tweets produced every day or two, pulls out trends and interesting information, and gives that information to companies so they can understand what's happening. The great thing is that you can even tell whether the flu will spread widely or what news is about to break, and these data-based analyses come out very quickly.

Indonesia is another very good example. Jakarta floods every year, so the Jakarta city government asked people to tweet their location and the flooding around them. That way the government knew in real time which parts of the city were under water.

Likewise, during the earthquake in Japan last year, when mobile signals were poor, Twitter kept working, so people could use it to reach family and friends in an emergency and get help. It was a sign of life.

What I want to say is that advertising lets us provide these great services. We've seen a lot of innovation in how people communicate. This is a place where you can talk publicly, in real time, with someone anywhere on the planet, so we haven't abandoned the original idea of "the pulse of the planet."

QDaily: Then how do you give advertisers better ad products without ruining the user experience?

Advertising is a kind of content. If it's good content, it performs well, so people actually have a basic interest in good content. Interestingly, some of the most memorable and representative content on Twitter comes from brands, and we're proud of that. It also means the average user follows some brands. That's something users choose to do. They really do pay attention to brands and follow them. Companies like McDonald's and Oreo have produced some memorable examples.

In short, for ads to perform well, you need good content. It's a virtuous cycle: advertisers put out good content, users like it, and the feedback is positive.

We care a great deal about user experience, and from time to time we use "engagement" to measure how good or bad it is. The average promoted app ad now has an "engagement rate" of 3%-4%, which is actually very high. It also means the promoted content is pretty good, and users genuinely like the ads placed in their timelines.

Will Twitter ever truly enter China, with users and not just clients?

QDaily: Personally, I think companies like Google and Twitter have a decent reputation in China. On the other hand, it seems to me that doing advertising business only for Chinese companies amounts to giving up on Chinese users. Of course, some factors make it hard to enter the Chinese market, but in the long run I don't think this is good for either Twitter or Google. How do you see it?

Twitter's core value is to reach everyone on this planet. That's a very ambitious goal, and it means we still have a lot of work to do. A large share of people really haven't been reached by Twitter yet.

Of course we hope to reach Chinese users. But for now we're focused on getting the Chinese advertising business up and running, creating an effective channel for Chinese companies to tell their stories. We set up the office in Hong Kong because we wanted to be closer.

QDaily: You have political experience in Washington. Is there a good way to deal with the Chinese government?

Ah... The important thing is to follow the rules and keep communicating.

QDaily: How long do you think it will take to truly enter the Chinese market?

I can smell the soil, but I don't know. Right now our focus is on helping Chinese advertisers.

QDaily: You've been general manager for Greater China for nine months. How would you sum up that time?

It's only just beginning. My role is to introduce Twitter to this market, so it's still a learning process. I'm still learning Chinese, which may take me another nine months. But I'm very happy here. I get to meet a lot of people and see China's digital landscape. Overall it's been great, and I'm looking forward to working even more closely with advertisers next year.

QDaily: How many people work in the Hong Kong office now? What kind of people do you want to hire?

We've only just opened, so there are only a few of us, and we're hiring. We want people with digital or sales experience, especially people who have worked at large Chinese companies. I think that would help our business a lot.

QDaily: Do you have specific plans? What share of revenue do you hope Greater China will bring in?

Everyone I meet here tells me it's hard to plan very far ahead, because China changes so fast. As for revenue, we don't break that out, though we do report U.S. revenue separately. Right now, markets outside the U.S. account for 34% of Twitter's total revenue. But three-quarters of our users are outside the U.S., so we see a big opportunity to make money, because the largest share of our revenue doesn't yet come from those users.

QDaily: So what's your next step in China?

Market education! We'll go one agency and one client at a time, explaining what Twitter is worth and how to use it.