Talk of a Twitter IPO, and BlackRock’s interest in acquiring shares at a rumored $9bn valuation highlight the fact that Twitter has quietly grown into a significant business. It may not be nearly as big as Facebook, but with an estimated $350m in revenue in 2012, Twitter is not the pre-revenue, we’ll-worry-about-monetization-later company it was just a few short years ago.
Next stop: an advertising API
So how can Twitter accelerate its revenue growth? The launch of an advertising API might be a good start. Facebook has an advertising API, and LinkedIn launched one late last year.
Offering advertisers an API through which they can purchase ads and manage ad campaigns is increasingly a no-brainer for large services like Twitter. Many big advertisers and their agencies run campaigns across multiple platforms and advertising APIs enable them to scale their campaigns much more efficiently. An API-less platform may see less spend, as campaigns that must be managed manually and not through popular third-party campaign management tools don’t get the same attention or investment as campaigns run on platforms that do offer advertising APIs.
Twitter certainly recognizes this, and according to TechCrunch’s Ingrid Lunden and her sources, the company is finally ready to launch its own advertising API. These sources indicate that Twitter is starting to prime the pump in discussions with advertisers, and one source says that the API will be “very close to what their current self-serve model is” in terms of what it supports.
Late, but for good reason
Rumors about a Twitter advertising API first surfaced in 2011, and on the surface it would seem that Twitter has dropped the ball in releasing one so late in the game. But there may be a good reason for delay: before providing advertisers with the means to scale their campaigns more easily, Twitter had to re-architect its business.
That was a significant, and somewhat painful undertaking because Twitter was previously positioned as an open communications platform. Being an open platform made Twitter a hit with developers, but this significantly limited its ability to control the user experience and monetize its audience. Now that it has effectively ditched the developers standing in its way, Twitter can focus in on monetizing the experiences it controls and once it releases its ad API, that monetization should really ramp up, paving the way to IPO.