Twitter projects $1 Billion in ad revenue by 2014

Steven Loeb · June 2, 2012 · Short URL: https://vator.tv/n/2729

Forecast doubles after push for self-service platform overseas

With Facebook looking considerably weaker after its disastrous IPO, could there possibly be an opening for another social network to swoop in and take its crown? While that possibility doesn’t seem likely to happen anytime soon, new projections by Twitter could make it a bigger competitor to Facebook than it had ever been previously.

Twitter is expected to hit $1 billion in ad revenue in 2014, Bloomberg reported on Friday, citing unnamed sources.

Ad sales make up nearly all of Twitter’s revenue, which was $139.5 million last year, according to eMarketer. Analysts had originally forecasted that Twitter would be generating around $500 million by 2014, around half of what is now being projected.

Twitter, which currently has around 140 million users, recently expanded its advertising base, allowing more localized advertising on their self-service platform.

In March, Twitter teamed up with American Express to give exclusive discounts to people that message about the certain companies, including Whole Foods, H&M, Virgin America, FedEx and Cheesecake Factory. The users get discounts when they use their Amex card that they have synced up to their Twitter account.

For example, a user who has their American Express card synced to their Twitter might use a hashtag involving the Cheesecake Factory. Then, when they use their card at the restaurant, they will get a discount when they make a minimum purchase.

While big businesses were the first to be included in the program, Twitter said that they were planning to expand to smaller, local businesses as well.

Twitter is expanding this program internationally, and that is a big source of the projected revenue that the company is expecting in the next few years.

How does Twitter compare?

If the projections hold up, it will have taken eight years for Twitter to reach $1 billion in advertising revenue, behind both Facebook and Google.

Google hit the number in five years, and made over $10 billion in advertising revenue in the first quarter of this year.

Facebook took six years, generating over $3 billion in revenue in 2011, of which 85% was from advertising, according to their S-1 filing with the Securities and Exchange Commission earlier this year.

Twitter’s new revenue forecast is hardly set in stone, and they company might miss their target, the sources told Bloomberg.

(Image source: blog.hudsonhorizons.com)

Steven Loeb

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Twitter

Startup/Business

Joined Vator on April 9, 2008

What is Twitter?

Twitter is an online information network that allows anyone with an account to post 140 character messages, called tweets. It is free to sign up. Users then follow other accounts which they are interested in, and view the tweets of everyone they follow in their "timeline." Most Twitter accounts are public, where one does not need to approve a request to follow, or need to follow back. This makes Twitter a powerful "one to many" broadcast platform where individuals, companies or organizations can reach millions of followers with a single message. Twitter is accessible from Twitter.com, our mobile website, SMS, our mobile apps for iPhone, Android, Blackberry, our iPad application, or 3rd party clients built by outside developers using our API. Twitter accounts can also be private, where the owner must approve follower requests.

Where did the idea for Twitter come from?

Twitter started as an internal project within the podcasting company Odeo. Jack Dorsey, and engineer, had long been interested in status updates. Jack developed the idea, along with Biz Stone, and the first prototype was built in two weeks in March 2006 and launched publicly in August of 2006. The service grew popular very quickly and it soon made sense for Twitter to move outside of Odea. In May 2007, Twitter Inc was founded.

How is Twitter built?

Our engineering team works with a web application framework called Ruby on Rails. We all work on Apple computers except for testing purposes.

We built Twitter using Ruby on Rails because it allows us to work quickly and easily--our team likes to deploy features and changes multiple times per day. Rails provides skeleton code frameworks so we don't have to re-invent the wheel every time we want to add something simple like a sign in form or a picture upload feature.

How do you make money from Twitter?

There are a few ways that Twitter makes money. We have licensing deals in place with Google, Yahoo!, and Microsoft's Bing to give them access to the "firehose" - a stream of tweets so that they can more easily incorporate those tweets into their search results.

In Summer 2010, we launched our Promoted Tweets product. Promoted Tweets are a special kind of tweet which appear at the top of search results within Twitter.com, if a company has bid on that keyword. Unlike search results in search engines, Promoted Tweets are normal tweets from a business, so they are as interactive as any other tweet - you can @reply, favorite or retweet a Promoted Tweet.

At the same time, we launched Promoted Trends, where companies can place a trend (clearly marked Promoted) within Twitter's Trending Topics. These are especially effective for upcoming launches, like a movie or album release.

Lastly, we started a Twitter account called @earlybird where we partner with other companies to provide users with a special, short-term deal. For example, we partnered with Virgin America for a special day of fares on Virginamerica.com that were only accessible through the link in the @earlybird tweet.

What's next for Twitter?

We continue to focus on building a product that provides value for users.

We're building Twitter, Inc into a successful, revenue-generating company that attracts world-class talent with an inspiring culture and attitude towards doing business.