Photo: Dario Sanches / Flickr, CC
The launch of Twitter’s Ads API — an “application programming interface” that allows advertisers to plug their own ads into Twitter’s ecosystem — will probably turn out to be one of the more significant moments in the history of the microblog platform.It also lends itself to some speculative guesswork about when the company might finally file IPO papers with the SEC in order to sell stock to the public. One potential clue is to look at how long it took Facebook to file for its IPO after it launched an ads API.
Advertisers are eager for an easy, effective way to target the millions of people who use Twitter every day. The API provides that, and thus it will likely also provide a solid economic underpinning for Twitter.
Twitter is already profitable. But a formal ads API has the potential to automate ad buying on Twitter at a mass scale. It could turn Twitter’s torrent of promoted tweets and trends into a tsunami. Among Twitter’s first API clients are TBG Digital, Salesforce and Adobe. Guess what? They’re among Facebook’s top media buyers, too. They funnel hundreds of millions of dollars into Facebook every year.
At this point, an IPO might become too tempting to resist.
IPO filings, of course, are also triggered by the number of private investors you have, so it’s not just about revenue. But it is about scale. One reason Facebook went public after its ads API launched was because it wanted the vast sum of money the IPO generated to invest in further scaling up its platform.
Facebook’s ads API launched in August 2011. The year before, its revenues were just $1.9 billion. In 2011, however, revenue grew to $3.7 billion, and then $5 billion in 2012.
Facebook’s IPO was filed in early February 2012 — just six months after its ads API launched, which more than doubled Facebook’s revenue in two years.
If you assume that Twitter has the same kind of scale/revenue issues that Facebook had, it would put the company on a timeline to file its own IPO in … August 2013.
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