Twitter has received enough media attention to be a household word, but still has a relatively small audience. The Pew Internet & American Life Project found in November 2010 that just 8% of online Americans used the service. But eMarketer is cautiously optimistic about Twitter’s fledgling ad products.
eMarketer expects Twitter to earn $150 million in revenues this year, the vast majority of which will come from the US. This represents a substantial increase over revenues of $45 million during 2010, the first year Twitter sold advertising.
By 2012, eMarketer forecasts, Twitter revenues will reach $250 million. But the company must show it can live up to its hype.
“If Twitter can grow its user base and convince marketers of its value as a go-to secondary player to Facebook, it will succeed in gaining revenue,” said Debra Aho Williamson, eMarketer principal analyst. “In 2011 it must work overtime to give its early advertisers a positive experience.”
Twitter’s monetization efforts will go into full gear this year, with the current Promoted Products suite and the pending launch of a self-serve platform akin to Facebook’s highly successful ad targeting system.
Twitter revenues will still be small compared to those of Facebook, but by next year eMarketer expects Twitter to pull in more ad dollars than Myspace.
Ad revenues at the troubled News Corp. property have tumbled as the site lost popularity. According to comScore, Twitter had overtaken Myspace in unique monthly visitors by August 2010.
COMMENTARY: HeeHaw. I had estimated that Twitter would do about $145 million in revenues in 2011, which is very close to the $150 million forecasted by eMarketer. Here's how I came up with my revenue estimate:
- Internet Search Deals With Google and Microsoft (October 2009) - $25 million/year
- Promoted Tweet Ad Revenues: Average of 50 customers per month @ $100,000 per promoted tweet times 2 tweets per month = $10 million per mo or $120 million per year.
Total Estimated Twitter Revenues for 2011: $145 million ($25 million + $120 million)
Twitter's Promoted Tweets advertising offerings are still in beta according to Twitter CEO Don Costolo and limited to a few national brands. Promoted Teets has been called very successful, with engagement rates of 5%, which are very high, and 80% of customers who placed ads will do so again.
In a previous blog post dated December 2, 2010, "Will Twitter's 'Promoted' Advertising Model Work for Advertiser's? Nothing Conclusive Yet, But Some Interesting Results", Jim Spinello, SVP of marketing and communications at rEvolution, it means using Twitter as a foothold for making a connection.
"If your advertising model is to buy, place, and move on, then Twitter is probably not the right investment," Spinello says. "Any buy on Twitter must be an engaged buy. It's not like buying a banner ad or broadcast commercial. Buying on Twitter is all about creating a dialogue and continuing the conversation."
Spinello's advice: Think of a buy on Twitter as a sponsorship.
"Buying on a platform like Twitter could be thought of in terms of buying a traditional sponsorship," Spinello says. "There's the cost of entry, but you have to invest/spend to activate your buy in order for it to be worth the initial investment."Of course "activating" your buy means that after the initial media spend, you have to ask: Then what? What will you do with these followers? Will you offer them a real world opportunity? Will you engage them in a conversation that exceeds a 140-character limit?
The point, according to Spinello, is that an ad on Twitter can bring people to your brand, but what you do after that will determine the real value of the exchange.
I like Promoted Tweets high engagement rates, and low number of advertiser's. So far, ads have been fairly inconspicuous and unobtrusive, and I hope that it stays that way.
I didn't estimate Twitter's revenues for 2012, but I would estimate at least double the 2011 figure of $145 million or approximately $290 million to $300 million.
Courtesy of an article dated January 24, 2011 appearing in eMarketer
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Posted by: Jordan Shoe | 01/25/2011 at 05:23 PM