Photo: Scott Beale / Laughing Squid
Research firm EMarketer estimates Twitter‘s ad revenue was about $50 million in 2010, will be $150 million this year and $250 million in 2012. (Bloomberg report)The main reasons, according to the report, are:
- Twitter is growing as fast as Facebook did;
- Facebook’s ad revenue grew as fast once it started ramping up its sales efforts, which Twitter is just now doing; and
- Ad agencies are pretty happy with Twitter’s ad products so far.
It makes sense. Twitter has more than 175 million users and keeps growing like a weed. What’s more, we would ad, most of online advertising so far is search advertising, and brand advertising dollars are still mostly on TV.
Twitter ads; which are in the form of promoted tweets and trends, provide exactly what TV ads don’t: interactivity and engagement. As brand ad dollars go online, Facebook will probably get most of it, but Twitter is very well positioned to get more than its fair share.
If Twitter can entrench itself durably into the mainstream, it’s not hard to imagine the company reaching 500 million users, and ramping up ad revenue all the way up to $1-2 billion 5 or 7 years from now. Who knows what the stock market will be like then, but it’s conceivable that at that point Twitter could IPO at a valuation around $10 billion, which would make even the investors who got in at a $4 billion valuation very happy.