Twitter Plays With Text Ads, But Where’s the Revenue?

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twitter_smallADOTAS – Where’s the beef, Twitter? And by beef, I mean revenue — according to eMarketer, you’re going to bring in $250 million this year, which doesn’t really justify the billions of dollars ($7 billion? Really?) private market speculators think you’re worth.

How are you going to get to a quarter billion in revenue? Yes, geotargeting for Promoted Tweets is nice, but I don’t see brands chomping at the bit. And branded pages are a cool idea, but are you going to charge for them? Possibly follow the Facebook Page advertising model?

And now you’re testing a new revenue product — third-party text ads that appear below the trending topics column. Well, that’s a smart use of dead space, but we’re talking incremental revenue at best.

There’s another problem, buddy — sure Vice President of International Strategy Katie Stanton just boasted about 200 million accounts, but that doesn’t equal 200 million users. The microblogger’s zombie problem is right out of “Night of the Living Dead.”

Last month, Cornell University and Yahoo! Research suggested 0.05% of its users are responsible for half of the tweets — a little math figures that to 10,000 highly active members. Combine that with a recent Pew study suggesting only 8% of American Internet users are tweeters and Twitter sounds like kind of a small community to be dropping major ad dollars into.

However, Twitter’s data is quite valuable for social monitoring purposes, hence why the company charges fees for data streams through Gnip. As more brands look for social monitoring services, requiring the purchase of more streams, could this become enough of a revenue driver to offset lackluster ad revenue?

Or should Twitter reconsider that rumored $10 billion acquisition offer from Google? Now those guys know how to soak up the ad revenue.

3 COMMENTS

  1. Bravo. It is about time the media starts to take an objective eye towards Twitter.

    You should add that there has been virtually zero growth in users in the U.S. since 2009 and what few gains in 2010 (25.3M to 25.7M – Compete) in the U.S. are more than offset but the number of businesses creating accounts last year (~800,000 – BIA/Kelsey and ConStat) – so in effect a net loss of human beings.

    It is critical to emphasize that the active user base is really closer to 5M, or about 2% of the population. With no growth Twitter will never be more than a niche technology for extraverts, people selling social media services and fans of Lance and Colbert. Tough to make billions of dollars in that scenario.

  2. While revenue may be slow, I just can’t agree with the criticism that Twitter will remain a service used only by the digerati. As personalities continue to become brands– unfettered to a publication, a sports team, a specific movie studio, etc.– Twitter will grow as a bigger and bigger broadcast medium for normal people. You may have a small number of active tweeters, but the audience for those tweets will grow and grow. And at some point ad dollars will flow where the eyeballs go, though Twitter does need more rapid development of different advertising formats to see which fits its platform best. For a start-up, they’ve been a bit slow to test new revenue models, IMHO.

  3. Typical Twitter Account: All Twitterpated, the twit tweets every day, sometimes a couple times a day. 2nd month, a tweet or two. 3rd month, the novelty wears off and he gets a life and realizes nobody really cares what he is doing (or thinking)except MAYBE his family and dog (and even that is questionable).

    Unless you are a celebrity, not that many people care about you (or think about you). Besides, how many people have time to read this crap? Information overload. How many people have something interesting to say more than once a week? Your life is not that interesting folks. This exaggerated sense of self worth is a fad.

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