Twitter to Rack Up $150M in Promoted Ads

Twitter will make $150 million in promoted ads this year, up more than 200 percent from the $45 million it made in 2010. Twitter still needs to boost user engagement to boost growth.

Twitter will earn $150 million in revenues in 2011, up more than 200 percent from only $45 million in 2010, when it launched its trinity of Promoted Tweets, Promoted Trends and Promoted Accounts.

eMarketer did some number crunching and expects most of Twitter's ad sales to be generated in the United States, where it has strong partnerships with Disney and Pixar, American Express, Coca Cola, Starbucks, Hewlett-Packard, and Dell.

Moreover, eMarketer analyst Debra Aho Williamson said Twitter could earn another $100 million in 2012 from its popular ad programs.

All of this comes despite the fact that Pew Internet & American Life Project said in November that only 8 percent of Americans on the Web use Twitter.

Twitter has cited about 180 million people as its worldwide user number, but its growth is nowhere near the pace of Facebook, which has accrued more than 600 million users since its launch in 2004.

Unless Twitter finds a way to keep users engaged for longer periods of time, it will find itself challenged to get more users to latch onto its short message service, where users leave brief messages and flit away. Facebook at least offers games to keep people on its network for 20 to 30 minutes a day.

"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," said Williamson. "In 2011 it must work overtime to give its early advertisers a positive experience."

Under Twitter CEO Dick Costolo, who led the company's Promoted ads efforts before taking over the top gun role from Evan Williams, Williamson expects Twitter's Promoted products suite and self-serve platform will ramp up this year.

Promoted Tweets is the company's inaugural ad product, allowing companies to pay for tweets hawking their products on a CPM basis, or per thousand people who see their tweets.

Promoted Trends features a company or product name in the trending topics on Twitter. The newest ad offering is Promoted Accounts, which are suggested based on a user's public list of whom they follow.

When an advertiser pays to promote an account, Twitter's algorithm looks at that account's followers and determines other accounts that those users tend to follow.

Williamson noted that Twitter's revenues will still only be a fraction of the $4 billion Facebook is expected to earn in 2011, after earning $1.86 billion in ad sales in 2010.