Twitter's Advertising Revenue May Triple to $150 Million, EMarketer Says

Twitter Inc. will probably more than triple its advertising revenue to $150 million this year as more companies use it to spread marketing messages, according to Internet researcher EMarketer Inc.

Ad sales for Twitter, which introduced its advertising program in April, may reach $250 million in 2012, said Debra Aho Williamson, an analyst at EMarketer, which today released its first multiyear research report on the blogging site. San Francisco-based Twitter has lured advertisers such as Nissan Motor Co., Hewlett-Packard Co. and Starbucks Corp.

Twitter, which has more than 175 million registered users globally, is competing for advertising dollars with larger companies such as Google Inc. and social-networking rival Facebook Inc. The company will need to boost its user base while demonstrating that ads posted on its pages are effective, Williamson said. A December Pew Research Center report said only 8 percent of U.S. Web surfers use Twitter, she noted.

“The company is definitely attracting brand advertisers,” Williamson said. “The difference is going to be whether Twitter can prove itself to advertisers as delivering results. I think this will be the year that we know a lot more.”

Twitter, founded in 2006, said last month it’s valued at $3.7 billion after receiving a $200 million funding round led by venture capital firm Kleiner Perkins Caufield & Byers. It was valued at $1 billion in September 2009, a person familiar with the matter said at the time.

Twitter declined to comment on its sales numbers in an e- mailed statement.

Facebook-Like Growth

The pace of ad-sales growth at Twitter resembles that of Facebook, Wiliamson said. Facebook, which was founded in 2004, had ad sales of about $150 million in 2007, the year after it ramped up ad sales, she said. EMarketer estimates ad revenue of $1.86 billion for Facebook in 2010.

Vying with Facebook won’t be easy. The leading social networking service has more than 500 million users and it has added features that duplicate those available on Twitter.

To boost sales, Twitter is likely to unveil a do-it- yourself ad service that won’t require contact with salespeople and is similar to offerings on Google and Facebook, Williamson said. The service will make it easier for smaller and mid-sized businesses to market their wares on Twitter, she said.

Global expansion will give Twitter an added revenue boost in the coming years, Williamson said. EMarketer doesn’t have estimates for Twitter’s overall revenue, which may include sales from agreements to distribute Twitter information on other sites, including search engines.

Nissan Campaign

The company’s most visible advertising offering is its “promoted trends” feature that lets advertisers pay for placement atop a list of so-called trending topics, or those that are popular at a given time on Twitter. The company also lets advertisers promote themselves among user searches and alongside suggestions of accounts that users may want to follow.

Nissan used the promoted trends tool to market its Leaf vehicle in connection with the North American International Auto Show in Detroit earlier this month, said Joshua Clifton, Nissan’s manager of social media communications. The campaign, which ran 24 hours, had more engagement from users than expected, including users clicking on links or reposting a Twitter message, Clifton said.

“We wanted to make ourselves top of mind and be in that part of the conversation,” he said. “Our reach was pretty strong.”

To contact the reporter on this story: Brian Womack in San Francisco at Bwomack1@bloomberg.net.

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net.

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