Twitter Files S-1, Mobile Drives Two-Thirds Of Ad Dollars

"Mobile has become the primary driver of our business,” Twitter states in its S-1 filing with the SEC to start the public process of issuing an IPO. In fact, mobile was the original driver of Twitter, which itself started as an SMS messaging platform and has retained that 140 character limit ever since. The company revealed that 65% of ad revenue, which totaled $316.9 million in 2012, is generated off of mobile devices.

The company says its revenue increased 198% in 2012 to $316.9 million, but it continues to show a net loss of 79.4 million, a decrease of 38% in 2012.

Twitter’s user base has grown to 218 monthly actives as of June 2013, although there is some flattening of growth. Between March 2012 and June of that year the Twitter base grew from 138 million MAUs to 151 million, but in the same quarter of this year overall users grew from 204 million to 218. Another metric of scale it put forward was the number of monthly timeline views by that user base, standing at 150 billion in June, up from 136 billion in March.

Twitter argues in the filing that its key value propositions to users are the ability to share content with everyone at once, discover new and unique content, engage in breaking news and live events and have conversations with people worldwide.

In defining the value proposition for advertisers, Twitter cites promoted tweets, accounts and trends as unique native ad formats that “provide our advertisers with an opportunity to reach our users without disrupting or detracting from the user experience on our platform.” The company distinguishes itself from Facebook (without naming the rival social network) in highlighting the “asymmetric follow model” that does not require mutual following. Following is just one factor of many, including actions that people take on the platform and the topics they tweet about to form their “Interest Graph.” “We believe a user’s Interest Graph produces a clear and real-time signal of a user’s interests, greatly enhancing our targeting capability.”

Twitter touts its viral power and earned media reach for paid advertising on its system. The live nature of tweeting allows advertisers to leverage real-time events and engage in conversations about unfolding experiences. The company also cites its pay-for-performance pricing as providing more calculable ROI for advertisers and complementing offline campaigns.

It plans for growth include worldwide recruitment of the 2.4 billion Internet users and 1.2 billion smartphone users worldwide. Partnerships with international partners are planned, as is mobile app development.

Of special note in the S-1, Twitter signaled intentions to integrate more content into Twitter via partnerships and acquisition of new technology “to enable our platform partners to distribute content of all forms.” In recent weeks Twitter has been working on programs that help TV companies distribute video clips from their shows as the shows air live. Of course, the company released its short video app Vine earlier this year.

Its plans for advertisers include improve targeting capabilities. But the company also says it will launch self-serve ad platforms in select international markets to expand its ad business into new territories. "Finally, we intend to develop new and unique ad formats for advertisers. For example, we recently introduced our lead generation and application download Twitter Cards and Twitter Amplify, which allows advertisers to embed ads into real-time video content.”

A snap response from one ad industry veteran and Pivotal Research analyst Brian Wieser was “positive on the company and its business as a while, as it clearly has established itself as one of the world’s most important media properties, and one which is increasingly important to advertisers.” Wieser noted that the Twitter user base is still small compared to Yahoo, AOL and certainly Facebook. But he also notes that these rivals may be more subject to commoditization than Twitter. Key to the company profitability will be achieving scale and succeeding in an international expansion that is only starting, he says.


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