The micro-blogging site confirmed in a tweet earlier today (13 September) that it had submitted an application to the US Securities and Exchange Commission. The confidential filing means it does not have to submit detailed financial information – including revenue and income – until three weeks before it embarks on a roadshow to drum up interest among investors.
Twitter, which recently revealed it has around 200 million users, is expected to generate $583m (£368.8m) in advertising sales this year, according to eMarketer. It is not expected to surpass the $1bn (£632.6m) threshold until 2015, however, when the social network is projected to pull in $1.3bn (£822.4m) in ad revenue.
The site has been ramping up its analytics offering this year in an attempt to accelerate ad revenues around real-time marketing, music content, ad targeting and ecommerce. It hired its first head of ecommerce last month (28 August) and has announced a string of high profile deals with advertisers including Mondelez International, WPP and Starcom MediaVest Group already this year.
The annoucement comes a year after Facebok floated on the stock exchange. Industry analysts predict potential shareholders will demand a better performance than the issues that plagued Facebook’s IPO last year.
Nate Elliott, analyst at Forrester, says: “Twitter has firmly established itself as a social tool that people love to use and that the press loves to reference – and more than 60% of US marketers are now on Twitter as well. And Twitter works hard to serve those marketers: the company learned how to sell sponsored tweets without upsetting users, when critics weren’t sure it was possible, and it offers more useful marketing measurement tools than bigger competitors like Facebook.
“But there’s still work to be done if Twitter wants to become a viable business. Marketers aren’t yet fully satisfied with the results they’re achieving on Twitter, and the company still has to improve its ad targeting and find additional ad formats to sell. If this move helps them grow the business faster and focus on those challenges that’ll be good news not just for Twitter but also for the marketers who use the site.”
Micke Paqvalén, chief executive and founder of social content platform Kiosked, says: Filing for IPO means that Twitter will now be under huge pressure to show that it is a profitable business, and its advertising model will play a huge role in deciding its value.
“To demonstrate profit, it’ll be necessary for Twitter to demonstrate that it can monetise this content effectively, and this can be done by making images and video directly shoppable. Twitter is going in the right direction but only with a non-intrusive, useful and relevant advertising model, will it be possible to monetise its content effectively without alienating its community.”
The road to Twitter’s IPO
- 2006 – Twitter is launched to the general public by founders Jack Dorsey and Evan Williams after being originally launched as an internal messaging service.
- 2007 – The social network is spun off from Obvious – the company it was launched under – into its own business.
- March 2008 – the micro-blogging platform has 1.3 million registered users.
- December 2008 – Dorsey steps down as CEO and becomes chariman. He is repalced by co-founder Williams
- April 2010 – Twitter racks up more than 100 million registered users.
- October 2010 – Former chief operating officer Dick Costolo becomes Twitter’s chief operating officer after Williams steps down from the role
- March 2011 – Dorsey returns to the company as executive chairman pledging to focus on product development.
- February 2012 – Twitter reports its has 500 million registered users.
- December 2012 – Google Youtube exec Bruce Daisley joins Twitter as UK sales director
- March 2013 – Twitter overhauls its advertising platform to give marketers more insight into real-time campaign management.
- April 2013 – Twitter announces music sharing app.
- September 2013 – Announces intention to launch an IPO.