ref="http://www.cityam.com/company/twitter">TWITTER ran the first advert on its $1bn valued site yesterday, heralding the next phase in its business model.
The site will show ads from companies including Starbucks, Virgin America, Sony Pictures and Red Bull.
The advertising programme branded “Promoted Tweets” will be rolled out to up to ten per cent of users this week. It will provide a welcome boost to the revenue Twitter has generated from selling real-time updates to Google’s news service since December, a deal worth millions a year.
It will also allay fears that the much vaunted site has no clear path to profit, despite its meteoric rise.
The ads will take the form of instant messages, or “tweets”, with their customary 140 character limit, and will initially only appear when the site’s search facility is used. The tweets will be targeted through key search terms, although the next wave will see the ads appearing within users’ “feeds” when they log onto the site.
Crucially, the ads will also appear in third party software, such as TweetDeck, which allows users to check their account without having to log onto the main Twitter site.
Private equity firms including Union Square Ventures, Institutional Ventures Partners, Benchmark Capital and Spark Capital all own stakes in Twitter, which was used by almost 70m people in February.
The service has risen in prominence after being widely used during the MPs expenses scandal.
It has also taken an active role in the election campaign. Ellie Gellard, the prolific tweeter who spoke at the Labour manifesto launch, was found to have previously tweeted her disapproval of Gordon Brown. And Labour’s candidate for Moray was removed from standing after tweeting expletives about colleagues.
Q&A | TWITTER FINANCES
How did Twitter make money before it sold ads?
It made almost no revenue until it began selling real-time search results to Google in December.
How much money has been spent developing the site?
The company and its investors have ploughed $160m into Twitter since its conception in 2006.
How much is Twitter worth?
It was recently valued at a staggering $1bn (£650m) by analysts.
How many users does it have?
An estimated 70m users logged on to Twitter in February.
How does it measure up to Facebook?
Facebook is streaks ahead in terms of revenue. Some analysts predict the world’s leading social network site could rake in $1bn this year, from its 400m users.
What about Bebo and Myspace?
There is talk of AOL pulling the plug on Bebo just two years after paying $850m for it. Its number of unique users plummeted 45 per cent year-on-year to just 12.8m in February. Myspace has also struggled since Murdoch snapped it up for $580m in 2005, attracting a quarter of the number of users of Facebook.
So, what is the point of Twitter?
It has proved a bellwether of public opinion over issues like the MPs’ expenses scandal and is often the source of breaking news from both professional journalists and regular users.