Twitter ad sales tipped to climb as FourSquare hits six million users

A new report claims Twitter will take in over $US150 million in advertising revenue over the next 12 months as it expands its promoted tweets and other advertising programs, with a focus on including small business and becoming independent from private financing.

The move also comes as location-based start-up FourSquare has hit a milestone of six million users, with one million of those added within the last six months, as it continues to focus on small business deals.

Both claims highlight the importance social media and networking are placing on SMEs and local business – FourSquare’s model relies on as many local businesses as possible signing up, while Twitter also wants to attract more smaller, local businesses.

The focus on localised purchases is also the main driver of the fast-growing group-buying industry.

A new study from eMarketer has claimed ad spending on Twitter reached $US45 million in 2010, with that figure set to rise to $US150 million in 2011 and $US250 million in 2012.

Twitter has introduced a number of new advertising programs, including its “promoted tweets”, in order to involve small businesses and move away from dependence on financing from private investors.

“One reason for the dramatic growth forecast this year is the upcoming launch of a self-serve ad platform,” eMarketer analyst Debra Williamson said in a blog post.

Williamson also said the advertising model pursued by Twitter is the same that fuelled Facebook’s growth, with the micro-blogging service set to takeover MySpace in ad revenue next year.

“If Twitter can grow its user base and convince marketers of its value as a go-to secondary player to Facebook, it will succeed in gaining revenue,” she said.

Twitter has previously said that its promoted tweets feature is working well, and that it is turning into a big enough business to maintain independence.

Chief executive Dick Costolo also wants to get small businesses involved. Last October he said that the company wants to “offer a self-serve tool for local businesses to buy Twitter ads, and is working on ways to deliver those ads based on location”.

The as-yet-untitled service is set to begin this year.

However, last month it received another round of funding worth $US200 million, valuing it at $US3.7 billion.

Meanwhile, according to a new blog post from FourSquare, the start-up now has over six million users, with one million of those joining within the last six weeks.

A report from Bloomberg has also claimed FourSquare co-founder Naveen Selvadurai said the company is now valued at over $US250 million and will hold another round of financing later in 2011 – but a new statement from the company has disputed the conversation took place.

FourSquare works by having users “check in” to a particular location through a smartphone app. The more people who check in, the more popular that particular location becomes, and several companies offer discounts to FourSquare “mayors” – users who check in the most amount of times.

And while the service has taken awhile to gain popularity in Australia, with 60% of users located in the US and a large portion of the rest in Europe, large brands including Borders, Coca-Cola and Ray Bans have offered deals for local users in the past few months, indicating the service is gaining traction.

FourSquare was contacted regarding how many users are located in Australia, but no comment was available before publication.

Selvadurai also says the company plans to have 10 million users in June, after passing the six million user mark just this month. He claims the site “pulls in some revenue from big brands,” but is aiming at increasing revenue through signing up more local businesses to promote deals.

“Other sites want to keep you inside at the computer, while our entire goal is to get you out of the house,” Selvadurai said.

FourSquare took a $20 million investment last year, led by Andreessen Horowitz, which valued the company at $US120 million, Selvadurai said.
But chief executive Dennis Crawley has told TechCrunch that the company wants to expand, and could possibly start harvesting user data.

“Lots of people look at Foursquare and sees a check-in game. We started off like that, but we would like to prove that we’re now more than that. We’re getting interesting data from users, and we’re thinking of ways to recycle it back to these users in ways that can make their lives richer and more interesting.”