Twitter Ad Revenue Growth Slows Down, Push Internationally
Twitter’s ad revenue growth will fall from the triple digits last year to “mere” 83% growth in 2012, eMarketer predicts, reaching nearly $260 million worldwide by the end of this year.
The social media service, which is continuing to roll out self-serve ad offerings, will see growth in ad revenues around the world taper off over the next three years yet remain solidly positive. By 2014, eMarketer estimates, Twitter will enjoy worldwide ad revenues of $540 million.
Currently, 90% of Twitter’s revenues come from US sources, with other countries contributing just $26 million to its ad revenues this year. The site will have diversified its revenue sources slightly by 2014, but 83% of dollars will still come from the US.
LinkedIn Ad Revenue Growth Slows Down, Expand Internationally
LinkedIn, which has lower revenues and a lower growth rate overall than Twitter, gets a greater share of its ad dollars from outside the US.
This year, when the site will see $226 million in ad revenues, a 46.1% increase over 2011, 32% of that money will come from abroad.
By 2014, US advertisers will account for 60% of LinkedIn’s revenues of $405.6 million, according to eMarketer estimates.
eMarketer forms its estimates of social network ad revenues through a meta-analysis of data from dozens of research firms, company information and industry trends. This forecast represents an upward revision of LinkedIn’s revenues and growth rate compared with eMarketer’s previous forecast, issued in September 2011, due to a stronger-than-expected advertising program at the site. Twitter’s ad revenues are close to those expected last September, with growth continuing on the expected trajectory for an additional year.
COMMENTARY: It does not surprise me that ad revenue growth rates for both Twitter and LinkedIn will decline between 2012 and 2014, and that in order to maintain ad revenue growth, both social sites will need to expand internationally. Like Facebook, both social sites have hit a critical inflection point, when user growth rates decline, eventually peak due to market saturation, and this will automatically place a cap on advertising revenues.
Twitter’s international expansion may help fuel a threefold gain in revenue, even as it raises censorship challenges for the microblogging service, a subject I went into in great detail in my blog post dated January 27, 2012.
In a blog post dated January 21, 2012, I mentioned Twitter's announcement that that it had 100 million active users per month and received more than 400 monthly unique visitors in September 2011. In October 2011, Twitter CEO Dick Costolo revealed that Twitter signups tripled with the launch of iOS 5 integration, so it would seem that Apple has had a significant hand in getting the microblogging network to the 500 million account mark.
If Twitter plans on expanding into China it better get used to a lot of government redtape and censorship. In a blog post dated December 25, 2011, I mentioned that China has an estimated 500 million internet users, but that Chinese social networks are highly censored by the government. In fact, up to two-thirds of the staffs of social networks are dedicated to policing posts, and this does not include government censors, which have been estimated to be has high as 100,000.
Twitter CEO Don Costolo said at AllThingsD’s Dive Into Media conference.
“We would love for people in China to express themselves. Under the current situation, that’s not possible.”
China-based Twitter clones, Sina Weibo and Tencent Weibo passed a combined 550 million users last November, and will give Twitter stiff competition in Asia. Sina Weibo recently boasted that they had easily broken Twitter's previous traffic record.
eMarketer was very generous by increasing LinkedIn's ad revenues and growth rates from their estimate of September 2011. However, in a blog post dated November 17, 2011, I commented that LinkedIn had reported revenues of $139.5 million in Q3 2011, but had lost $1.6 million. LinkedIn's international expansion is bound to increase its sales and marketing costs as it opens offices throughout Asia. I fully expect that LinkedIn will again report a slight operating loss when it reports in Q4 2011 revenues and earnings sometime in early February.
According to comScore, LinkedIn had 87.6 million unique visitors per month at the end of September 2011, an increase of 64% from the third quarter of 2010; total comScore page views of 7.6 billion, an increase of 51% from the third quarter of 2010.
A major concern which I have expressed repeatedly is whether the ad-supported revenue model that has become the standard of social networks is flawed or whether advertising on an individual's supposedly private social space are compatable with one another. This may help explain why Facebook, Twitter and LinkedIn have such abysmal average revenues per active user as shown in the following chart.
Courtesy of an article dated January 31, 2012 appearing in eMarketer and an article dated January 30, 2012 appearing in Bloomberg
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