One of the many reasons Facebook’s share price has fallen substantially in the wake of the company’s IPO is that investors are questioning whether the world’s largest social network will be able to figure out how to make money from the rapidly growing number of users accessing Facebook through mobile devices.
But another future IPO candidate, Twitter, may have problems too but mobile monetization isn’t apparently one.
According to Twitter CEO Dick Costolo, the popular microblogging service generated more revenue from its mobile users than its website users on many days in the first quarter of the year.
The revelation came from Costolo at an Economist Group conference in San Francisco:
We’re born of mobile. We have an ad platform that already is inherently suited to mobile, even though we launched our platform on the Web and only started running ads on mobile recently.
That ad platform was launched earlier this year and inserts Promoted Tweets into the timelines of Twitter users accessing their accounts through the company’s iOS and Android apps. It’s a risky ad model for obvious user experience reasons, but apparently it’s paying off for Twitter, which some recently predicted could hit $1bn in revenue in the coming years.
Right now, of course, Twitter’s revenue is far lower than that; while the company doesn’t disclose its financials, analysts estimate its revenue to be in the low nine-figure range.
That may be quite respectable for a company that hasn’t been around a decade, but it’s far less than, say, Facebook and perhaps not all that impressive for a company that counts some 140m active monthly users and has taken hundreds of millions of dollars in venture capital.
Which highlights the risk for Twitter if and when it decides to go public: it may be further along in figuring mobile monetization out thanks to the nature of its service, but the efficacy of the ads it’s serving is still yet to be proven and questions around just how much revenue Twitter can generate in total may give investors pause.