Twitter's Acquisition Of ZipDial Isn't Just An Emerging Markets Play - It Will Improve Its Entire Advertising Offer

Early analysis of Twitter's $30 million to $40 million acquisition of India-based mobile marketing start-up ZipDial points to the acquisition as a way for the microblogging service to bolster its position in emerging markets by making the platform more accessible to the millions of people who don't yet have access to smartphones and high speed mobile internet services.

While this is most certainly the primary reason for the deal, if integrated in the right way, the acquisition is likely to improve Twitter's overall advertising offering too.

Making Money From Missed Calls

ZipDial might be unknown to most people, but it counts some of the world's biggest brands - P&G, Cadbury. Pepsi, Disney, KFC, and many more - among its clients. The company specializes in turning the simplest features of a mobile phone - SMS, voice calls and very basic mobile internet - into lucrative marketing platforms.

ZipDial is most famous for its missed call marketing format. The missed call is a hugely popular way for people to communicate in emerging markets: It's a way for people to let their families know they are safe; that they are at a rendezvous point; or simply to say hello. ZipDial has capitalized on this by allowing brands to advertise phone numbers for consumers to call, then quickly hang up before incurring charges. Through ZipDial, the advertiser then returns the call or can send a promotional text message. Those calls could include recorded messages from celebrities, or live updated sports scores.

But ZipDial's value is beyond just another ad format. As Gary Bourgeault, a Seeking Alpha contributor, points out, when consumers opt-in to a dropped call service, they are giving marketers permission to contact them. That signals a level of interest in future marketing communications - a vital datapoint for marketers.

The missed call format could also extend to sponsored units - Twitter's bread and butter when it comes to ad formats. Twitter could give brands the option to sponsor some of the news or information services signing up to use the format. Twitter already has its Amplify program, in which it partners with media and sports brands like the NBA and the NFL to showcase video and images from live events, complete with sponsorships from brands like American Express and McDonald's. ZipDial gives Twitter the chance to extend this initiative beyond the handful of US partners that have joined it to date.

Beyond Emerging Markets

Acquiring a company like ZipDial won't just make Twitter a better option for advertisers looking to reach consumers in emerging markets like India - it will help make the company a better mobile marketing platform overall.

When Unilever's top executives present at major advertising and mobile conferences, they often showcase an award-winning missed call case study for its Active Wheel brand in India. The return call offered 15 minutes of free entertainment (Bollywood stars being interviewed, music, and so on,) interspersed with ads. The company claims it is now the biggest media channel in many rural villages in India, with millions of people engaging with it each month. That's a huge achievement to create a media channel in villages that have no sanitation, no running water and no forms of entertainment.

What's interesting when you hear those Unilever marketers speak about case studies like this is that they don't just talk about sales or awards, but about how these kind of programs have changed their way of thinking about marketing more generally. It's shifted them from only considering the traditional media channels - TV, internet banner ads, outdoor etc. - and into being better marketers by honing in on actual consumer behavior, not just the platforms their media agencies are pushing them towards.

Twitter's commercial executives have spent the past 18 months positioning its platform as a complement to TV. But by bringing on a company like ZipDial, Twitter can start thinking less about the types of channel and more about the types of emerging behaviors it can monetize.

That's not just about behavior in emerging markets. It's about using thinking from emerging markets - where resources are scant and many people have skipped owning a computer, or a bank account, to simply owning a mobile phone - to improve its services in developed markets. The mobile phone was never developed so people could bypass charges by making dropped calls - people developed this behavior, and media companies like Twitter should be adapting to these behaviors. Users adore "hacks" and simplicity when it comes to mobile technology - just look at the flyaway success of the Yo app.

Beyond missed calls, ZipDial also specializes in allowing advertisers to offer consumers top-ups to their prepaid mobile accounts and ways to consume content while making frugal use of mobile data: Both vital currencies amongst users in India. But that application of valuable (but relatively cheap for the advertiser) currency could easily be extended into the types of content, vouchers or other "free" offers people in developed markets hold dear, with Twitter acting as the gift-giver on behalf of brand advertisers. All those formats can also play to the millions of Twitter's non-logged-in users it is desperate to find a way to monetize and prove the value of to investors as logged-in user growth slows.

And beyond new revenue streams and new ways of thinking from an advertising perspective, ZipDial also offers Twitter something meaningful it has been lacking: ZipDial founder and CEO Valerie R. Wagoner, a prominent female entrepreneur.

As Twitter's director of corporate development and strategy Jessica Verrilli tweeted, Wagoner is a much welcome addition in many respects, but the fact that she is female is important too. When Twitter last released its diversity numbers, it revealed just 30% of its employees are female, and it is keen to start redressing that balance - particularly at the top.

Twitter Does Need An Emerging Markets Boost

Most importantly, Twitter's latest acquisition is definitely an emerging markets play. ZipDial is an important entry point to India that Twitter is currently lacking. Just under 80% of Twitter's monthly active users come from outside its US market and more than 80% of the social network's revenue comes from mobile.

Over the next few years, global smartphone sales will be largely driven by new users in India. New smartphone users accounted for up to 92% of new smartphone sales in India in 2014, according to research from Mediacells.

Facebook is well ahead when it comes to the emerging markets play. Indeed, Facebook partnered with ZipDial in July last year to test the missed call ad unit.

Facebook also made its $19 billion acquisition of WhatsApp last year, which is the number one messaging app in many emerging mobile markets. 2014 was also the year it began its Internet.org mission to connect "the next 5 billion" to the internet. And it also acquired start-ups such as Finnish company Pryte that aims to make it easier for mobile phone users in under-developed parts of the world to use wireless apps. Twitter is playing catch-up.

ZipDial might not be the biggest acquisition Twitter will make in 2015, but it could help change its way of thinking when it comes to mobile marketing. In emerging markets and beyond.