When Twitter first appeared, its reluctance to produce a plan to produce revenue frustrated Silicon Valley investors. At first the company’s financial outlook was poor, making no profits at all in 2009. Recently, this situation has changed. Twitter is bringing in money through advertising, using the data it collects on a daily basis to sell ads that are targeted to those most likely to use a service. Twitter is growing in the mobile and television markets.
During the last Super Bowl, Twitter was mentioned in half the advertisements. In light of its new success, Twitter is making preparations to go public.
Twitter, like Facebook and Google, collects data on all of its users and sells advertisers the ability to target specific markets directly. Twitter sells promoted tweets which are inserted into the feed of those users who match their demographic. They do this by crunching the data accumulated by hundreds of millions of tweets. Twitter has acquired companies which are able to analyze the data, and create better measurement tools to offer their advertisers.
Unlike Facebook, the Twitter format fits well with the mobile market, and Twitter is currently making more from mobile ads than from desktop ads. This market continues to grow and Twitter has announced the acquisition of MoPub which will make it easier to place ads and expand the use of the data. The company is working on an ambitious plan to combine the mobile and television advertising markets. By using targeted data and coordinating with the television networks, they intend to time twitter adds to coincide with the television programs that the user watches.
Although Twitter appears everywhere, it could face obstacles to its plans to go public. First of all it is smaller than Facebook was when it went public, having only two hundred million users, about a quarter of the users that Facebook boasted when it went public and its revenue, only one billion dollars is also about quarter of that Facebook made. Furthermore, many users must go through another service to access Twitter. In order to compete with Facebook or Google, Twitter will have to offer their customers new products as Facebook is doing. Analysts such as Nate Eliot believe that Twitter is not yet ready to go public and investors are looking for more in the company than just the ability to bring in advertisement revenue.