Twitter received $25 million from Google (GOOG) and Microsoft (MSFT)'s Bing to make its tweets searchable, and the company claims it has -- at last -- become profitable. The real question, however, is, Why is Twitter afraid to make real money from advertising?
The company's expenses may be as much as $20 million annually, Bloomberg said, so that $5 million "profit" will not go very far toward paying back the $155 million it owes its investors. A big question mark hangs over Twitter's ability to turn itself into a real business. There is some talk of charging for advanced features -- but really, do you know anyone who would pay for Twitter? Me neither.
At the same time, everyone else is doing the obvious: Using Twitter as an ad medium, and profiting handsomely. Kim Kardashian makes $10,000 per tweet, the Daily Mail reports, for clients such as Reebok EasyTone and Carl's Jr. Similarly, BNET has several Twitter feeds that we use to advertise our content and attract readers, whom we then sell to advertisers. Here's mine. Why would Twitter itself not want to sell its massive audience to advertisers, either with sponsored posts, search driven ads or even old fashioned banner sponsorships?
One answer is that Twitter may not want to find out what its real revenue stream would be if it sold inventory to advertisers. The company may be (mistakenly) valued more highly by potential acquirers if they don't know what the potential revenue actually is. The moment Twitter becomes a grown-up business and sells ads, it would generate a revenue stream that would allow investors to accurately calculate how much the company is worth.
And with its audience plateauing at about 60 million users, as TechCrunch reports, that may be a calculation Twitter doesn't want to see.
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