Twitter Inc. expects to generate at least $1 billion in sales in 2014, two people with knowledge of the matter said, indicating that the blogging service will grow about twice as fast as some analysts now predict.
Twitter based the forecasts on expected advertising demand, said the people, who asked not to be identified because the numbers are private. The San Francisco-based company could change or miss the forecasts, the people said.
Demand for advertising aimed at Twitter’s more than 140 million users is benefiting the company. Researchers at EMarketer Inc. have said that in 2014, Twitter will reach $540 million in ad sales, which make up virtually all of its revenue, up from $139.5 million last year. Even so, it will take Twitter longer to generate $1 billion than bigger competitors Facebook and Google.
“The marketers who have used Twitter’s advertising opportunities have been pleased,” said Nate Elliott, an analyst with Forrester Research in New York. “Twitter’s going to be able to push forward and continue to make more money from it.”
Google crossed the $1 billion threshold five years after its founding, while Facebook, which sold shares in an initial public offering last month, achieved that goal six years after it got started. Founded in 2006, Twitter will be eight years old in 2014.
Twitter has stepped up a campaign to induce marketers to devote more of their ad budgets to its service, which lets users post messages of no more than 140 characters to followers.
Twitter, which unveiled its first ad offering in 2010, started a self-service platform this year to reach more small businesses. It also recently expanded mobile-ad services.
Companies need to spend money on Twitter to ensure their messages are seen, said Jeremiah Owyang, an analyst at San Mateo, California-based Altimeter Group. “Because all of the brands are jumping in and spewing content, there’s a deafening noise. So, the one way to cut across that is to advertise and make your content shine higher.”
Under Chief Executive Officer Dick Costolo, Twitter is also working to expand internationally, including in Japan, to lessen its reliance on the U.S. market. The percentage of revenue Twitter earns from the U.S. will fall to 83 percent in 2014 from about 90 percent this year, researcher EMarketer estimated in January.
(Source: Bloomberg News)