IPO debut: Here are five ways Twitter can make money

Twitter on Thursday made a scintillating debut on theNew York Stock Exchangewith its scrip climbing around 73 per cent over the issue price at $45.1 apiece, valuing the microblogging site at nearly $25 billion.

Twitter, whose public debut is the most highly anticipatedIPOsince Facebook’s $16 billion offering in May 2012, began trading under the ticker ‘TWTR’.

Here are some ways Twitter can generate revenue:

1. Advertising Revenue

According to research firm eMarketer the global digital advertising revenues for 2013 was $117.6 billion, projected to increase to $163 billion by 2016. In this fast changing market situation a company like Twitter is well positioned to leverage its upward moving 232 million strong user base for big digital ad revenue.

Already having an advertising revenue component that’s finding its footing, the three main areas Twitter makes ad related income from are: promoting tweets, promoting trends and promoting accounts. Given the large size of its dedicated and ever increasing user base along with the company’s endeavours to keep the advertising component non-disruptive to the user experience, it is fair to assume that Twitter will soon be reporting sizable revenue from its advertising stream.

2. Twitter Chatter Data Sales

Data licensing or firehosing is the other greatest revenue generation method at Twitter’s disposal. The vast amount of data that flows across Twitter’s public forum is a valuable source of saleable information. With over 500 million daily tweets in the public forum Twitter sells the data to companies that are interested in exploring trends and brand image in the public.

The vast and increasingly real-world driven data includes information on views, opinions, preferences, and general indicator of attitudes towards products, brands, personalities, situations, politics and nearly everything under the sun. Data analytic firms use this data to generate meaningful insights which become increasingly accurate due to the large sample set.

3. Localised Services in International Markets

A new and still in development source of revenue is the international non-US markets. The majority of Twitter’s users are non-US and provide Twitter with an opportunity to broaden their business to international markets. The value of international consumer data to multinational companies and governments is of special interest as it provides crucial insights towards critical decision making.

By proliferating Twitter usage across the globe Twitter can match up not only with Facebook’s 1.2 billion strong user base but also tap in to the international firehosing business that opens up hundreds of billions worth of potential business. If adapted towards local languages Twitter would become a truly international force in business.

4. Invest in Analytics

With the new infusion of $1.8 billion dollars after the IPO it will be interesting to see what investments Twitter makes. A prudent and perhaps essential investment would be in the acquisition or development of a cutting edge in-house data analytics division that would allow Twitter to more effectively analyse the vast quantities of public data that is generated on its flagship platform.

By investing in data analytics with the advantage of being the source of the data as well Twitter will be able to design better user interfaces that encourage data accuracy and context for a more profitable outflow in its analytic division. A symbiotic business that would surely dominate the market.

5. Invest to Grow Users

Twitter is designed to be a seamlessly mobile experience and a majority of its dedicated user base uses mobile devices. By broadening the user ship foundations by constantly developing and adapting to upcoming innovations in mobile hardware and user-interface designs, Twitter will be able to leverage its bigger asset, customer engagement, further along the changing trajectory of mobile growth.

Should Twitter become like a Facebook sized global mobile always-on access-anywhere platform the multi-billion daily messages, images and links along with in-house custom developed analytics capability would allow Twitter to have its hands on the world’s pulse. And as we know, doctors tend to make a lot of money.