10 Reasons Why Twitter May Be Worth $8 Billion

When Apple, the world’s most valuable technology company, decided to integrate a social network into its mobile software, many thought it would partner with Facebook, the world’s largest social network. Nope. Instead, Twitter was chosen to be the iPhone’s network of choice. In the newly released iOS 5, Twitter will be spread across a number of Apple services, allowing users to sign in once and easily Tweet from any Apple app. When iOS 5 dropped last Thursday, new Twitter signups tripled.

At least that’s what Twitter CEO Dick Costello believes. During a progress report given at Twitter’s San Francisco headquarters in September, Costello reported that number but noted that it grew since the beginning of the year, indicating that the platform is becoming more mainstream; a destination where users can go to be entertained, informed, and kept in the loop with what their friends are doing.

That’s an amazing growth rate, reminiscent of Facebook’s meteoric accession. Many analysts don’t think Twitter can continue this rate of growth, but if the execs are to be believed when they say Twitter is still in its infancy, it may be able to balloon into a true Facebook competitor.

This statistic is interesting. Facebook has 500 million active users. Out of that small nation, only 1/5th of them sign in to Facebook at least once a day. Twitter, on the other hand, has 100 million active users of which 50 million sign in at least once a day. That means half of its users access the service at least once everyday. That’s a great ratio.

Twitter’s execs still have quite a mountain to climb in terms of the monetization of the company, but it’s heading in the right direction. At IAM’s Mix Conference earlier this month, Twitter’s Chief Revenue Officer, Adam Bain, told attendees that the service has around 1600 active advertisers, with 80% of them returning to do business. Get read for a bunch more promoted tweets.

As it stands, Twitter is set to bring in 140 million in revenue for 2011. That figure doesn’t sound bad until you compare it to Facebook’s $4.27 billion projected revenue for 2011. But according to a study by SharePost, if Twitter’s rate of revenue of growth continues it will be on pace for over $1 billion in annual revenue in four years.

When measuring a social event, Twitter execs use a figure called Tweets Per Second (TPS) to assess how popular something is. The TPS figure has been growing year over year, as more people sign up for the service use it as a real-time digital water cooler. When Michael Jackson died in 2009, Twitter’s servers buckled under the weight of the 493 TPS that were being sent. Two years later, when Beyonce showed off her baby bump at the MTV VMAs, 8,868 tweets were sent per second.

Twitter promotes cross-platform integration

Which brings us to our next point. When it comes to integrating a social network into the fabric of pop culture, there’s nothing better than Twitter. Award shows, TV premiers, and professional sports are all made into events thanks to Twitter. According to a survey conducted by Compete, 17% of Twitter users say they tweet about what they watch on TV. That opens up a huge area for cross-platform advertising.

Mobile advertising, according to many analysts, is the future. Mobile advertising is expected to break $1 billion by the end of this year. And it’s projected to grow. Twitter is poised to reap great benefits from that leap as 43% of users access the service via mobile phone. For comparison’s sake, 34% of Facebook users access the network from a mobile device.

Twitter’s, like Facebook, largest user demographic is the 18-29 group. That college-aged/young adult group makes up 18%. Coming in a close second with 14% is the 30–49 age range. This number is double what it was last year, making the service more attractive to possible advertisers.