Twitter gets $1bn valuation but where are the revenues?
Twitter is raising around $50m more which sees its valuation leap to around $1bn, but there are still no immediate signs of significant future revenues.
Interesting that Techcrunch has broken the news of the latest round of venture capital money raised at the same time that Facebook says it is making money ahead of its 2010 schedule. Does Twitter have a schedule? I’m guessing not.
Last week Twitter changed its terms and conditions to allow it to implement targeted advertising across the site and last month the micro blogging service said it was looking to launch commercial accounts to entice business users to pay for premium services like detailed analytics. It’s making all the right sounds.
Much of the speculation around where it might run ads to generate revenues has centred on linking the ads to its search results. This would be similar to Google’s money spinning paid search business, but it is unlikely to generate anything like the revenues until it creates some new way of displaying its search.
Other than search, Twitter is almost hamstrung by the way that its service works. Users spend most of their time when using it on a single screen displaying a constant stream of tweets. Integrating significant advertising into this, particularly when so many use third party client products like TweetDeck, is problematic to say the least.
The potential is there. How much that potential is really worth is one question and whether the $1bn valuation is warranted is another. The new funding follows more than $35m raised earlier this year. In between raising that $35m and this $50m its valuation has increased from $250m to $1bn.
Giving his take on the valuation Salil Deshpande, a general partner at venture firm Bay Partners told Reuters: “When something like Twitter or Facebook becomes a cultural phenomena, it’s much more than the sum of the parts. It’s really tapping into a cultural shift. As the network effect increases, the value increases.”
It is certainly more than the sum of its parts and the network is growing. In the same period, between the two rounds of funding, Twitter’s user numbers have leapt. In July the site’s worldwide traffic rising to a record 51.6m unique users, according to comScore. US user numbers rose to 21.2m, up from 20m in June, and now represent 41% of the site’s traffic. International users represent 59% of Twitter’s traffic, increasing from 55% in June.
Twitter has now raised a total of around $55m to date with $30m million in the bank. The fresh funding would certainly suggest it is planning something, but there are a lot of people who remained unconvinced that, Twitter as useful as it is for networking and marketing, will make significant revenues anytime soon.
[Twitter]
