Twitter’s ad revenue is likely to triple to $150 million this year as more companies use it to spread marketing messages, according to a new report.
Twitter introduced its advertising program in April last year, and currently generates an estimated $50m per year in ad sales, according to the report from Internet research firm EMarketer.
Report author Debra Aho Williamson, an EMarketer analyst, goes on to predict that the microbloging site may reach $250 million in ad sales by 2012.
The findings come from Emarketer’s first multiyear research report on Twitter.
San Francisco-based Twitter has lured advertisers such as Nissan, Hewlett-Packard and Starbucks.
Twitter, which has more than 175 million registered users globally, is competing for advertising dollars with larger companies such as Google and social-networking rival Facebook.
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.
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.