Peter Kafka

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How Twitter’s Ad Business Went From Zero to $500 Million in Less Than Four Years

dick costolo twitter d11

Asa Mathat | D: All Things Digital

Just a few years ago, the people who ran Twitter — co-founders Evan Williams and Biz Stone — didn’t even like talking about the notion of selling ads.

But Williams and Stone have moved on. And under current CEO Dick Costolo, Twitter has very quickly become an advertising company.

Twitter only formally started selling ads in April 2010, about six months after Costolo joined the company, originally as chief operating officer. But those were basically tests, and Twitter only generated $7.3 million in ad revenue that year.

The next year, that number leapt to $77.7 million, and last year Twitter’s ad salesforce generated $269.4 million.

This year, the company may come close to doubling last year’s number: In the first half of 2013, Twitter sold more than $221 million worth of ads. (Click chart to enlarge.)

twitter ad #s s-1

That’s a very nice-looking ramp, and that’s very much part of a plan. Twitter’s sales team, lead by chief revenue officer Adam Bain, has argued for a while that it could have made more money, earlier, but that it wanted to bring in advertisers slowly — both because the company needed to make sure it had stuff it could sell them, and also because they wanted a nice-looking ramp.

So mission accomplished, optically:

twitter ad revenue chart

With an eye on Facebook’s struggles in the last couple years, Twitter has also made a point of noting that the service is in large part a mobile service, and that its ads have always worked for mobile users. In the second quarter of this year, Twitter notes, 65 percent of its ad revenue came from Apple iOS and Google Android devices.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work