After a short hiatus, our analyst roundtable series is back. Today we discussed Twitter’s IPO, ongoing valuation and the tone it has set for going public in today’s tech marketplace. Lots of buzz around Snapchat, NextDoor and others have followed in Twitter’s wake.

We also discussed our writings on variable pricing in local commerce. As the age of mobile collides with the age of big local, the opportunity arises to not only target ads with greater precision but also offer demand-driven product pricing. Think airfare pricing on steroids.

These will be ongoing topics, including our upcoming Leading in Local conference in San Francisco just three weeks away (email me for discount – mbolandATbiakelsey.com). Until then, check out the video below and ping us to engage around any of these topics.

The full video is embedded and the following chapter guide can take you to individual segments. Enjoy.

Roundtable chapters
— Airline Pricing Meets Local Commerce
— Can Twitter’s Performance Sustain Current Market Cap
— Quick, Everybody IPO
— NextDoor and the Neighborhood-Level Network Effect

The post Knights of the Round Table Return: Twitter Valuation and Airline Pricing Models appeared first on BIA/Kelsey - Local Media Watch.

Twitter is just one of the many online and offline media that BIA/Kelsey tracks in the latest wave of the Local Commerce Monitor™ (LCM). LCM is BIA/Kelsey’s long-running study of how U.S. SMB advertisers are evolving their use of media to acquire and retain customers.

SMBs perceived ROI (return on investment) for Twitter has increased over the past three years. As shown in the chart below, in Wave 17 nearly a third of SMBs surveyed rated Twitter’s ROI as Excellent (10-19x Spend) or Extraordinary (Over 20x Spend), compared to 25% in Wave 16, and 17.1% in Wave 15.

Twitter isn’t the only social media to show growth in SMB perceived ROI from Wave 15. Facebook pages have also been growing since Wave 15 (2011). In Wave 15, 23.1% of Excellent (10-19x Spend) or Extraordinary (Over 20x Spend), which grew to 29.4% in Wave 16, and 34.1% in Wave 17.

Other points about SMBs and Twitter:

• Wave 17, 25.7% of SMBs surveyed rated the quality of lead sources from Twitter as Good or Excellent, compared to 22.8% in Wave 16.
• In Wave 17, nearly 34% of SMBs surveyed said they currently have Twitter accounts, and another 42% are planning to add it.
• 47% of SMBs with Twitter report updating it daily, while 31% update weekly, in Wave 17.

Interested in learning more about LCM Wave 17 or getting a custom cut for your business? Check out BIA/Kelsey’s LCM page.

We’ll be covering this and other themes in great depth at our upcoming conference, Leading in Local: Interactive Local Media, December 10-12 in San Francisco. Be there and join the conversation!

If you are looking for more information on Twitter’s recent IPO, try Jed Williams’ blog post “Twitter’s IPO: What Are 140 Characters Really Worth?”

The post SMBs use of Twitter in Online Advertising Increases in Local Commerce Monitor Survey appeared first on BIA/Kelsey - Local Media Watch.

In light of Twitter’s upcoming IPO, slated for Thursday, BIA/Kelsey has developed its own projections of the social network’s future financial performance to arrive at what we believe is a reasonable stock price and achievable fair market valuation. We’ve also analyzed the micro-blogging service’s traffic and revenue trends and highlighted key strategic growth levers for it to pursue.

Our conclusion: While some in the popular press consider a $17-$20 stock price range to be modest, and others in the investment community may deem it disappointing, we believe that between $17 and $18 per common share represents reasonable pricing based on the current financial health of the business and the growth necessary to support this price.

The discounted cash flow analysis that we employed suggests that for Twitter to live up to a $17 share price and $13.2 billion fair market valuation, the company must grow aggressively, and far more efficiently. This translates into revenues eclipsing $1 billion in 2014, with EBITDA turning positive for the first time next year as well. By 2020, revenue must surpass $5 billion, with EBITDA approaching $3 billion, a margin of 57 percent.

So, how does Twitter get there? Strategically, the path is littered with challenges, but also lined with opportunities.

First, the promising signs. While most media and technology companies struggle to solve the mobile advertising puzzle, Twitter already generates 70 percent of its ad revenues from mobile platforms. Overall ad revenue grew by triple digits over the past year, and ARPU is on the rise.

But the news isn’t all rosy. U.S. users appear to be plateauing. Internationally, Twitter has not demonstrated a strong ability to monetize its global base, which constitutes nearly 80 percent of all users.

Strategically, what can – and should – Twitter do to achieve a $13.2 billion fair market valuation? BIA/Kelsey sees four key business opportunity areas: 1) Scale the advertising business via technology; 2) Expand the SMB channel (largely through partnerships); 3) Leverage early Social TV leadership to capture TV ad spend; 4) Diversify revenue streams (primarily the Data Licensing unit). These are key drivers of revenue and EBITDA that would position Twitter to grow at the pace and scale necessary to support the share price and fair market valuation that we currently deem appropriate.

BIA/Kelsey clients can access the full report here.

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