To spur growth, Twitter (NYSE: TWTR) is offering its self-service advertising platform to globally placed businesses. The expansion allows small- and medium-sized businesses around the world to use a suite of targeted advertising tools to identify customers and run ads without an account representative. Twitter's commonly used advertising tools allow small- and medium-sized businesses to use tweets as they would business cards, to attract website users or to direct them to sign up for offers such as receiving a newsletter or installing an app. Initially available in 15 languages to businesses in 33 countries, in late 2015, Twitter expanded self-service advertising options to 200 countries and territories. The company now offers its self-service advertising features and marketing tools to small businesses in just about any country where users can legally tweet.

Tools and Budgets

Businesses create ads by selecting tweets that already have high engagement, choose how they want to promote them and set advertising budgets. Twitter's international ad-pricing structure allows businesses to promote tweets based on small advertising budgets. The pricing structure allows advertisers to select the user actions for which they want to pay, a feature designed to encourage small businesses with minimal advertising budgets to use the social media platform. For example, an advertiser can structure ads to pay only when a user clicks on a promoted tweet or submits an email address. Internationally based Twitter advertisers can access real-time data on how their promoted tweets are performing and easily recirculate their best-performing ads.

One of the most effective ways advertisers engage potential customers is by communicating with them based on shared interest. Twitter tools now allow small- and medium-sized businesses worldwide to engage users while they tweet about time-sensitive topics, such as current events or TV shows. Twitter's newly added video ads have become one of its most valuable features. Twitter updated its ad policy, so advertisers only pay when users view videos 100% in-view and play them for at least three seconds.

Twitter's advertising tools function in various ways in different countries. Small- and medium-sized businesses in new markets can determine which methods work best to reach their targeted customers through trial and error. For example, in the United States and Europe, Twitter drives growth through high-profile brand and celebrity tweeters but has not yet seen the same level of engagement in Asia. Twitter is expected to pursue partnerships with TV networks and social media influencers in Asia to grow in the region.

Potential Markets

In 2015, Twitter reported a monthly active-user count of 320 million and 100,000 active advertisers. Analysts and investors have voiced concerns that Twitter's U.S. audience is not growing; Twitter reports that 79% of its active users are outside the United States. The company does not break out geographic locations and percentages of small businesses currently using its self-service ads.

To date, major brands such as Nike and Coca-Cola have used Twitter to target customers in countries around the globe. By opening the self-service ads to businesses worldwide, a range of small businesses from technology startups to mom-and-pop storefronts can use Twitter's tools to engage with local customers. The rapid growth of startups in countries such as India indicates that entrepreneurs outside the United States may become significant contributors to Twitter's ad revenue.

Earnings Impact

Plans to roll out the small business advertising platform were in place before Twitter co-founder Jack Dorsey announced them. Dorsey became Twitter's chief executive officer (CEO) in June 2015, following Dick Costolo's resignation. In January 2016, with Twitter shares trading close to the company's initial public offering (IPO) price, analysts question whether the global advertising expansion is sufficient to reassure investors about the company's prospects.