June 23, 2011
Twitter revenue to skyrocket to $260M in 2012
Projections have Twitter sales propelling to $400 million in two years
As Twitter continues to tinker with its formula of being fun, functional and informative, it looks as if its advertising model is poised to generate a mint of revenue this year.
The San Francisco micro-blogging site is positioned to generate $260 million in sales next year. That's up 87 percent from a projection of $139 million in 2011, according to a just-released report by eMarketer.
While this year's sales is slightly below eMarketer's previous projection of $150 million, the growth is still nearly a three-fold jump from the $45 million generated in 2010. The 2011 downward adjustment is due to a slower rollout of global sales offices and self-serve ad offerings.
By 2013, eMarketer estimates Twitter’s worldwide ad revenues to reach the $400-million mark. This substantial take-off in estimates is based on the positive returns Twitter has seen in the promoted tweets that were launched in April of 2010 and the discussion of integrating promotion tweets right into account timelines (rather than in a column to the side of the platform.)
Twitter’s promoted tweets system often starts out as a standard tweet created by a brand and, if it is getting some traction on the platform, the company can pay to “promote” the content.
Kimberly Maul, an analyst from eMarketer told Vator News that the pricing on the promoted tweets is based on an auction format and specific numbers are not available but can vary.
Another substantial method of advertising offered on the site involves promoting a trend. For this Twitter can check and see what hashtags are gaining a lot of traction and then companies can pay to be featured when a person clicks on a hashtag and is directed to a page of similarly categorized content, then their brand of content will be featured somewhere on the page.
In June 2010, Twitter added a promoted trends advertising opportunity that moves a brand sponsored hashtag to the top of the trending column and denotes that it is a promotional trend.
According to Adam Bain, Twitter’s president for global revenue, in an interview with eMarketer, promoted trends are priced at $120,000 per day. The price was raised earlier this year “in response, partly, to market demand,” Bain told eMarketer.
The newest form of advertising that was added to Twitter, this month, was political advertisements. Mitt Romney’s presidential campaign was among the first to leverage this ad product.
Maul said that the ads that are the most effective on Twitter are ones that incorporate a deal, discount or exclusive content. She said that this is because Twitter users are “more likely to share or re-tweet these ads, which gives them a higher engagement rate, and therefore, more success.”
Advertising concerns
The promising growth and popularity of Twitter over the past year has been shadowed by the concern that the audience will grow and mature more than the revenue model. Since Twitter is competing for the same dollars that are often going to Google or Facebook’s more established business models, Twitter has has had to hustle to prove its advertising promise.
Earlier this year, Twitter's Dick Costolo said that 80 percent of advertisers are returning to the platform.
That hustling seems to be working.
In efforts to beef-up its advertising cred, this summer, the company acquired Internet advertising startup AdGrok for an undisclosed amount.
Twitter has publicly disclosed that its average engagement on promoted tweets hovers between 3-5 percent, but several of its promotions have gone viral and spiked off the charts. On such promotion was also considered the top tweet of the year, from VW.
The VW ad clocked in at a 52-percent engagement rate, half of the people that saw it interacted with it in some way. One of the VW trends even reached 90 million people. While Twitter can’t promise such an explosion with all of its advertisers, its easy to see advertisers digging deeper into the possibilities of “trending.”
Other brands that reached high engagement numbers on Twitter include Google (with 38 percent engagement), Old Spice (at 36 percent) and Papa John and Ford (each with 34 percent).
This recent projection, matched with Twitters plans to increase its international presence and advertising, could give Twitter investors the needed confidence to lead the company toward a much anticipated IPO.
(Image Source: Newzilla.net)
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