by Jon LeSage, editor, Used Car Market Reports
“Grow your local business today with Twitter Ads” – That’s the subject line of an email Twitter has been sending out lately explaining how Twitter Ads can drive sales to your local business. Not long ago, Twitter was considered a fun place to post 140 character messages to friends – but more recently its’ become an essential marketing channel for retailers, up there with Facebook.
Twitter is following Facebook’s path by launching an initial public offering sometime soon that could substantially increase its market value. The company has already met some of that target – see the chart above for a snapshot of how Twitter has grown from about $1B in market cap in 2009 to about $9B this year. That’s come through venture financing and private transactions – going public could shoot up that market value. Last week, Twitter made its prospectus public, providing a first glimpse at its financial health.
Facebook is more typically about friending, but Twitter likely has an edge for consumer interest-group niches and B2B markets. Twitter has been making money since last year through advertising, much of it mobile. Sponsored tweets that resemble regular user posts has been a method Twitter is selling. Some would say Twitter is an even more effective marketing channel than Facebook for reaching targeted consumer and B2B segments.
The funny this is that Twitter has been steadily losing money for a while – with a net loss of $79 million last year and $69 million for the first six months of 2013. It’s not a big deal for a lot of investors – since Twitter has shown growth in advertising sales, investors are likely to value its stock based on their expectations of future revenue and profit.
For some advertisers, Twitter’s 218 million people isn’t a big enough audience. That’s been their message to Twitter Inc. after the company released details on its IPO.
In its filing, Twitter said that 75% of its users entered the service through mobile devices during the second quarter and that 65% of its revenue came from mobile ads. That is sharply higher than the numbers of Twitter’s much bigger rival, Facebook, which had virtually no revenue from mobile when it went public last year. Facebook is seeing strong results in market value since its IPO – and Twitter stands a very good chance of making similar gains.