Dissecting Twitter’s Top Line: How Revenues Can Fly to $150 Million

Facebook created quite a stir (again) with the recent projection that its global revenues could surpass $4 billion in 2011 … the majority coming from small businesses that are self serving. Now Twitter is abuzz, as eMarketer predicts that top-line income will triple to more than $150 million in 2011, and surge to $250 million in 2012. Considering that the company only began experimenting with advertising platforms last April, then elevated Dick Costolo to CEO in October to hone the network’s business model, the pressing question is “how?”

Twitter has rolled out a series of advertising trials geared to promoted products: accounts, trends and tweets. To date, these have focused almost exclusively on national brands, with the Nissans and Starbucks of the Fortune 500 galaxy grabbing the lion’s share of attention.

Now, there is increasing evidence that Twitter sees advertising scale in automated, self-serve capabilities for clients. Recently, Twitter updated its business center to include an array of educational and commercial tools, including best practices, case studies, analytics and a “get started” dashboard (see picture below).

The interface is rudimentary, asking clients only to provide estimated budget, advertising products they are interested in and contact information. This isn’t a purchase platform just yet, but a vehicle for Twitter to begin generating leads with accompanying data.

The move toward full-purpose self-serve seems natural after the examples set by Google and now Facebook. Interestingly, however, the beginning benchmark for estimated monthly spend is $10,000, a number that would challenge many SMB wallets.

Whether self-serve promoted products can scale down-market at lower price points is wait and see. But if the projections are right, then Facebook is hot on the trail of the local advertising Holy Grail — appealing to small businesses at scale with a self-serve platform that they are willing and able to utilize. If Twitter’s revenue growth is to emulate the Facebook curve, then capturing both sides of this paradigm will be critical.