One of our more popular stories from 2010 outed Twitter’s new efforts in advertising as still highly experimental, just an exploration of the possibilities of one of the most popular microblogging platforms in the world. And that was just four months ago.
How quickly things can change.
Twitter could earn $150 million in advertising revenues this year, with the vast majority coming from the U.S., according to the latest forecast published by Internet market researcher eMarketer. Twitter declined to comment.
For a company that just raised $200 million at a $3.7 billion valuation, that might not seem like a lot of money. To compare, Facebook, which just raised $1.5 billion at a $50 billion valuation, is expected to collect $4.05 billion in 2011, more than doubling ad revenues from 2010. So Facebook raised a round seven and a half times bigger than Twitter’s at a valuation that’s 13.5 times bigger than Twitter’s, but do these things really help explain why Facebook’s revenue will be 27 times greater this year?
Perhaps that’s not being fair, though.
After all, Twitter just started selling advertising for the first time last year and only made $45 million, entirely from U.S. buyers. In 2011 and 2012, eMarketer says the company will make $150 million and $250 million, respectively. That’s some impressive growth no matter how you look at it, and the vast majority of it will still come from U.S. advertisers. Imagine if Twitter went full throttle on international advertising sales as well (Facebook’s advertising revenues internationally are already growing faster than they are domestically).
But Twitter doesn’t look prepared to go full throttle on advertising just yet.
Twitter appears to be taking a slow, gentle approach (maybe they’re still experimenting and iterating?) instead of trying to capitalize on their massive network and endless hype all at once. On one hand, they could be missing an incredible opportunity by potentially letting the excitement over the Twitter service flutter away. On the other hand, to return to the Facebook case, CEO Mark Zuckerberg has proven to some extent that a focus on development of the service, not on revenues, can be successful both for capturing a wider audience and for building the business.
Maybe Twitter’s slow experimentation will pay off, in the end. Do you think the company is intentionally taking things easy or will the site never monetize to the degree investors expect?
