Twitter and Facebook share a problem: Proving social ads work

Originally posted on Gigaom:

There’s a been a big focus recently on the advertising strategy at both Twitter and Facebook, with two in-depth profiles of Twitter in the Wall Street Journal and BusinessWeek that spent a lot of time talking about the company’s ad model, and increased attention on Facebook for moves aimed at improving ads, particularly on mobile platforms. Both are seeing their share of the ad market grow, but there is still one big question standing between them and the multibillion-dollar valuations they have received from investors — namely, do ads inserted into social activity actually work?

While Facebook is orders of magnitude larger than Twitter, the impetus for both companies to develop a robust advertising business is the same: because investors are looking for a stable — and rapidly growing — revenue stream. For Twitter, it’s about justifying the $8-billion market value it currently has as a result of…

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