Peter Kafka

Recent Posts by Peter Kafka

When Twitter Bought MoPub, It Bought Itself an Advertising Safety Net

safety netIn early September, a few days before Twitter announced it was going public, it announced that it was buying MoPub, a mobile ad startup.

The two events aren’t unrelated. Twitter executives won’t come out and put it this way, but MoPub offers the company a safety net: If Twitter’s growth stalls out, and the company never becomes a truly mainstream product, MoPub offers Twitter a revenue stream that isn’t dependent on Twitter users.

We got a peek at this strategy last week, when Twitter/MoPub formally declared that MoPub will be selling “native” ads. Right now, MoPub isn’t using Twitter data to augment the ads it sells on other people’s apps, but it’s easy to see that happening in the future. Which means Twitter will have the ad network that everyone expected Facebook to build.

And in theory, that means that Twitter can make MoPub’s ad business more valuable, even if its own ad business on its own properties hits a ceiling.

This morning, we got a bit more insight into Twitter’s thinking, when it released MoPub’s financials prior to its acquisition. Twitter had previously disclosed some basic information about MoPub in its pre-IPO documents, but today we can see much more.

The main takeaway: When Twitter bought MoPub, the company was on a tear.

In 2012, MoPub generated $2.7 million in revenue, and that number grew to $6.5 million in the first two quarters of this year. Then things really shot up: In Q3, MoPub did another $5.6 million. That is: In three months this fall, MoPub came close to the revenue it had booked in the first six months of the year, and more than doubled the revenue it had done in the previous year.

Losses? Of course. MoPub lost $8.1 million in 2012, and another $5.5 million in the first nine months of this year.

And there’s nothing that says MoPub’s growth will stay in the same curve. But if it does, it’s a nice boost for Dick Costolo: So far this year, MoPub has accounted for nearly three percent of his revenue. That can fund a very nice Christmas party.


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik