Twitter Cashes in on User Base

Advertising Revenue Key to Success

In the late 1980’s, Bill Gates took a very old marketing technique to a whole new level. Give away your product until you have mass appeal and demand, then find a way to monetize your audience. Perhaps more than any other sales channel, the internet has been a boom for companies using this strategy.

For most free online social networks and internet resources for consumers, advertising revenue is what keeps all that content and interaction free to the user. Twitter is no exception to this rule. Last year the relative newcomer to the social internet scene began to cash in on its loyal, and growing, user base.

According to a report from EMarketer Inc., Twitter earned $45 million in advertising revenue for 2010, and the company is projected to reach $150 million for 2011. The numbers are still much lower than its somewhat similar rival, Facebook, whose numbers were just under $2 billion. As they continue to grow their current user base of 175 million, the report suggests that Twitter could reach $250 million for 2012.

No company has put the marketing strategy into practice in a more successful manner than search engine giant Google. Since coming into the search engine game, Google has knocked out virtually all competitors except Yahoo and MSN, and has managed to secure an estimated 60-80% of the search market. As a result, revenues have regularly been in the billions, and its stock price is over $600 per share. All that from a web site that provides free information to the world.