Media Money with Julia Boorstin

Why Twitter's New Ad Initiative Is a Big Deal

Twitter's New Ad Initiative
Twitter's New Ad Initiative

Twitter is making a move which should dramatically grow its ad revenue. It's officially launching an ads application programming interface, or API, to give marketers more tools to buy and manage ads on Twitter.

The API will give marketers access to Twitter ads through certain third party tools, making it easier to add Twitter to a web ad campaign. Twitter is launching with five partners: Adobe, HootSuite, Salesforce, Shift, and TBG Digital.

"We want to make it easier for marketers to work with us and we want to give them more options," said April Underwood, Twitter's project manager for revenue. "By reducing friction it could increase the 'return on energy," she said, explaining that Twitter wants to make investing in its ads as easy and seamless as possible.

"Over time we will build out features, to help advertisers get a better return on investment by spending money in a more efficient way."

(Read More: Jeep Becomes Latest Victim of Twitter Hack Attack.)

Twitter is launching its API now to take advantage of improvements it's made to its ad platform over the past year —it launched mobile ads, plus much more narrow targeting by demographic and interest.

(Read More: Pay-by-Tweet Service Launched on Twitter.)

Salesforce's Mike Lazerow, who oversees its Buddy Media social buying tools, said that Twitter's API will be a game-changer both in terms of giving advertisers scale, and getting Twitter ad dollars.

Getty Images

"This lets all of our clients do everything they need to do on the two largest social platforms—Facebook and Twitter—so in the social ad battles instead of going in with a water gun, you can go in with an army," he said.

Bottom line: Lazerow said advertisers will be able to buy ads on Twitter much easier.

"You'll be able to test easier, scale easier, you'll be able to manage your campaigns at scale, I think it'll be really big for them," he said. It's also potentially big for Salesforce, which makes more money the more people spend on its platform.

(Read More: Facebook vs. Twitter, Who Has Edge in Mobile Ad Wars?)

Facebook's launch of an ad API made a huge difference for its business. eMarketer estimates that roughly 60 percent of Facebook's 2011 and 2012 ad revenues came from API-based buys. eMarketer said that Twitter has been growing fast.

Though the private company doesn't release any financial data, the measurement firm projects Twitter's revenue will grow 90 percent this year to $545 million, and that next year it will earn more than $800 million in global ad revenue.

—By CNBC's Julia Boorstin; Follow her on Twitter: @JBoorstin