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Wed 30 Jan 2013 11:00 AM

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Mobile uptake to help Twitter hit $1bn revenue

In 2012 social networking site believed to have earned US$135m in mobile advertising

Mobile uptake to help Twitter hit $1bn revenue

A strong uptake in mobile services will help Twitter, the world's largest real-time micro-blogging website, surpass US$1bn in revenue by 2014, according to a report by Greencrest Capital, a research and advisory firm that assesses companies that have yet to go public.

While many online platforms have struggled to get users to click on mobile adverts, an area which many social network sites are focusing, this appears to be one frontier Twitter has cracked. The California-based company, which was founded in 2006, reported a 75 percent year-on-year growth in mobile, putting it ahead of Facebook and LinkedIn in this respect, according to Greencrest.

The company is believed to be reaping more from mobile adverts than from those placed on its standard website. In 2012, Twitter earned US$135m in mobile advertising revenue from the US market, while Facebook recorded US$339m and Google US$2.2bn, according to eMarketer.

Twitter's projected mobile advert revenue is forecast to increase by about 85 percent this year and more than double in 2014. According to Greencrest the company's total revenue is expected to reach US$605m this year and exceed US$1bn in 2014.

Over 60 percent of Twitter subscribers use the site on their mobile devices, Shailesh Rao, a former Google executive poached by the micro-blogging site to head up its international operations, said in a interview with Arabian Business. Marketing on the site leads to between a 1 percent and 3 percent engagement rate, which is as much as 30 times better than traditional advertising, Rao said. 

"Central to the ability of an online platform to drive offline commerce, in our view, is a robust mobile offering," Greecrest’s analysts said in a recent report. "Mobile sits at the intersection of online and offline commerce, as we believe users looking to make real world purchases are increasingly turning to social media for information."

Twitter doubled its user base to 200m in 2012, versus Facebook's 837m users, with about 70 percent of its users coming from outside the US, while revenue reached US$300m. The company sees 11 new accounts created every second, or about 1m new users a day, according to Infographics Labs, and has recorded over 160bn tweets since it was created. President Barack Obama’s tweet in November marking his election victory was the most re-tweeted of 2012.

may list in an initial public offering (IPO) by the end of this year or in
2014. Some projections estimate the IPO could value the company
at US$9bn, while Greencrest says the figure could be as much as US$11bn
and possibly more if the company manages to illustrate a propensity to reap
higher revenue growth.

The Middle East is one of the fastest-growing markets for Twitter. The site has been instrumental during the protests that swept the Arab world over the past two years. It helped activists organise demonstrations and was arguably a key ingredient in the toppling of leaders in Tunisia, Egypt, Libya and Yemen.

Last week, Twitter entered into an agreement with Egypt’s Connect Ads, much in the same way that Facebook did the previous year, to churn out its advertising and sales products such as promoted tweets, promoted accounts and promoted trends across Egypt, Saudi Arabia, the UAE, Kuwait and Pakistan. The firm had already deployed a similar strategy in the US, the UK, Japan and Latin America.

Qatar’s Al Jazeera English, which was only carried in three US cities in 2011, and which wanted to expand its reach during the revolution that toppled Egyptian leader Hosni Mubarak two years ago, used promoted trends on Twitter to boost awareness with the hashtag #demandaljazeera. Promoted tweets drove live-stream views and allowed users to submit news items, resulting in an 8.8 percent engagement rate for a total of 92 promoted tweets across 4m impressions, according to Twitter documents seen by Arabian Business.

Promoted tweets increased the channel’s daily follower rate by 15 times to more than 200,000 total followers, with Twitter being a top referrer to Al Jazeera’s website. Traffic surged by 2,500 percent as a result.

North America accounts for about 31 percent of Twitter’s total active users, followed by Europe and Asia, which make up 20 percent a piece, then South America which represents 16 percent and each of the Middle East and Africa accounting for 5 percent. That compares with Facebook, which has around 24m users in the Middle East out of its 1bn users globally.

The Middle East "can be a significant revenue contributor to the business," said Twitter's Rao.

Digital media will more than double its share of the Arab world’s advertising market by 2015, according to a survey by Deloitte. Digital is the fastest growing media platform in the region and accounted for 4 percent of the total advertising spend in 2011. Deloitte expects digital to grow at a compound annual growth rate of 35 percent over the next three years, generating about US$580m across the region by 2015.

The full feature on Twitter will be published in Arabian Business this Sunday...

Arabian Business: why we're going behind a paywall

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