We're heading into the most important holiday season ever for Twitter. This year three times the retailers are using the service as did last year. And this surge in retailers activity — both paid 'promoted Tweets and Trends' and unpaid tweets — comes as the company faces a massive transition.
In the past year as it's rolled out mobile ads and new ways for advertisers to narrowly target customers, it's been turning the company into an advertising powerhouse, as it lays the groundwork to eventually go public — with its first S-1 filing perhaps coming as early as next year.
Twitter is revealing a new study Tuesday, commissioned by Kantar's 'Compete' market research division, which explains why the service has tripled its retail user base. The survey of Twitter desktop users finds that it does indeed drive retail traffic, revealing a direct link between exposure to retailers' tweets to online traffic and retail purchases.
Twitter users, even without seeing ads, are 24 percent more likely to make online purchases, than average Internet users are, according to the Compete study. And 'Promoted Tweets' —the company's main ad format — work. Users exposed to retailers' tweets are 44 percent more likely to make a purchase than average Internet users are. And Twitter drives consumers to search for products. The study finds that exposure to a retail tweet resulted in a 15 percent increase in users visiting a retail website via a search engine. (Read More: Why Twitter Has No Plans to Go Public - CEO)
Joel Lunenfeld, Twitter's VP of brand strategy, says that the results of this study, the first of its kind, will help bring more retailers to the platform, and will drive more advertising. "It's really important to the future of Twitter's business as well as the retail industry as a whole," Lunenfeld says. "People are trying to raise awareness about the deals they have, they're trying to generate conversations." (Read More: New Twitter Tools, Game Changer?)
And this year the conversations they're generating are more complex. Retailers aren't just tweeting more, they're getting creative, and that means more than just tweeting holiday shopping help, like @nordstrom is. Marketers are working to spark conversations on Twitter that go viral, which means sweepstakes and prizes — anything that encourages people to spread messages.
Target's #TweetTidings campaign will reward 1,000 people tweeting about the brand with gifts. Best Buy is hosting a "tweet-to-win" contest with prizes such as gift cards. And Nordstrom is featuring a "Santa Share" button on every page of its retail website, to encourage customers to tweet hints about what gifts they want. (Read More: Who Owns Your Tweets?)
It's worth noting that Twitter's new study doesn't address the retail power of its growing mobile users. About 60 percent of its 140 million monthly active users — that's 84 million people — primarily access the service on mobile devices. That means they're carrying retailers' messages with them right into the store. Twitter's Lunenfeld says the shift to mobile is a big win for retailers: mobile Twitter users are three times as likely to tweet while shopping than people using Twitter from a desktop computers. And the more people share, the more retailers benefit from what's effectively free advertising.
-By CNBC's Julia Boorstin; Follow her on Twitter: @JBoorstin
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