January 25, 2011

Twitter expected to triple annual ad revenues in 2011

$150 million projected for 2011, up from $45 million in 2010

Advertising spending on Twitter reached an estimated $45 million in 2010, and is expected to hit $150 million this year, according to eMarketer’s first full forecast of ad spending on the service.

“Promoted Trends is seeing good traction in the marketplace, which gives us cautious optimism for Twitter’s fledgling ad products,” said eMarketer principal analyst Debra Aho Williamson, author of the upcoming report “Worldwide Social Network Ad Spending: 2011 Outlook.”

“However, the company has a lot to do to live up to its hype,” Williamson said. “Twitter must work overtime to give its early advertisers a positive experience.”

By 2012, Twitter ad spending could reach $250 million, eMarketer estimates. But this forecast is dependent on Twitter growing its user base substantially. According to the Pew Internet & American Life Project, only 8% of online Americans use Twitter.

One reason for the dramatic growth forecast this year is the upcoming launch of a self-serve ad platform, expected mid-2011. The self-serve model has been major factor behind the growth of other online ad publishers such as Google and Facebook.

“Twitter is poised to go after the same performance advertising business that has funded much of Facebook’s growth,” Williamson said. “If Twitter can grow its user base and convince marketers of its value as a go-to secondary player to Facebook, it will succeed in gaining revenue.”

Twitter revenues will still be small compared to those of Facebook, but by next year eMarketer expects Twitter to pull in more ad dollars than Myspace.