Tweet Success: Twitter secures nearly $1 Billion

Some of us may have no interest in Twitter and see it as a social networking site that will fade over time. The rest of us are avid Twitter users who use the social networking site in many ways including to inform, follow and communicate. There are individuals who are more than just Twitter addicts. Big investors are supplying millions of dollars to the social networking site.

Dave Murrow of Think Fast! shares the hot topic in his blog post: “The Billion Dollar Communications Tool Called Twitter.” Reports released on Sept. 24 revealed that Twitter was close to securing $100 million in funding that valued the company at $1 billion. Skepticism comes in because a billion dollars is being invested into a company with virtually no revenue. Is Twitter really worth a billion dollars?

I see Twitter as a strong tool for communicating. I think it’s a new innovative way to do business by representing brands and people. As public relations students, we know the media heavily uses the social media platform to promote their content. After we graduate and enter the PR field, we are expected to have social media knowledge and practices. Although, I am a supporter for social media, it surprises me that millions of dollars are being invested into Twitter during the economy’s recession and speed of technology.

The New York Times  made a comparison, reasoning that only 60 employees maintain Twitter’s business, but the social media platform has doubled the market capitalization of Domino’s Pizza, which has 10,500 employees and brought revenues of $1.4 billion in sales last year. Twitter also has more than 54 million monthly visitors which is only one-tenth the population of Facebook.

What is Twitter going to use with $100 million in new investments? According to a BusinessWeek article, Twitter co-founder Biz Stone said advertising plans are on hold until 2010. Spectators claim acquisitions are going into search and marketing intelligence that companies can utilize to learn more about clients and potential markets.

From a PR prespective, Twitter has it strengths, weaknesses, opportunities and threats. Business moguls see the microblogging service as an opportunity for business, a channel to connect with targeted audiences internationally and a mainstream spot for marketing and news organizations. Non-profit organizations may see an opportunity in strengthening internal communications while college students may only view Twitter as another manner to connect with friends and classmates. A threat for Twitter is that it may fall into its grave as another fad in a few years.

I’ve learned from my internship with a PR agency how powerful it is to create a Twitter account for companies/clients, products/services and individuals. Twitter becomes a stronger tool for communication as more journalists, bloggers and media outlets are on the social networking site.

The tremendous amount of money now involved and high stakes returns back to my first question: do you believe Twitter is a billion dollar empire? Do you think the investments will lead to a success or a failure? Would you invest into Twitter or do you believe it’s non-profitable? How do the investments affect you as a PR student and future PR professionals?

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12 Responses to Tweet Success: Twitter secures nearly $1 Billion

  1. cgharai says:

    Twitter’s weaknessness prevail their strengths. Twitter describes itself as “a community of friends and strangers from around the world sending updates about moments in their lives”, but it is really a “micro-blogging” site.

    Twitter is very popular with the geek community on the West Coast, and spread out from there. The combination of techie messages, dot-com-geek-wannabes trying to get noticed # and @’s… it so mundane it just makes you wonder why you didn’t spend the last ten minutes doing something constructive instead.

    I am not old fashioned, but I have no interest in the fact that Twitter will one day, become the “played-out” Myspace in today’s social community.

    As for Twitter’s business model, they don’t have any ads – and they let you send and receive updates via text message for free. So how do they expect to make money, let alone stay in business?Simple. Once they reach a critical mass, they’ll start charging for sending text messages. Already, a lot of users are using their phones so they can “stay in touch” while out and about. Many of them are finding they can’t live without twitter on their phone. (Yes, they are sad, sad people.)

  2. bgansar says:

    It is very surprising to hear that Twitter is being called a billion dollar empire, I know that it is popular, but I was not aware of the money going into it. The power of Twitter is still unknown to so many-only those who have used the account to their own personal benefit in some way can understand the way this empire can work. I don’t think that this will be a dying trend any time soon, if you think about it there are many people who tried for years to stay away from Facebook, or those who deleted their profiles, but eventually they all come back-they have to be connected.
    We are curious people and we want to know the inside scoop, we want the deals, we need the information fast-Twitter is the answer. Slowly, but surely people are coming to recognize this.
    As far as the investment-side of Twitter; how can you put a dollar amount on something with unlimited information? If investing gives certain people power over how the social media tool works then that could be limiting and have a bad effect on it. As long as the investments stay independent and it doesn’t become a power trip, all should be good.

  3. astrazzara says:

    I don’t know if I would say Twitter is worth a billion dollars because it has just recently exploded in popularity. There may be something that comes along in the near future that may overtake Twitter. I don’t think it’s necessarily Twitter (the program) that people like but the platform people are drawn to. In today’s environment people want to have two-way communication with companies, and that’s why I think Twitter is so popular.

    I think Twitter could be profitable. Just as Facebook didn’t start off with advertisements but now does, Twitter has the same possibilities. I do wonder why Twitter is waiting till Fall 2010 to use advertisements. It seems like a long time, especially today when you have to act quickly.

  4. sdoyle says:

    I am not a fan of Twitter. I am being drug, kicking and screaming into it. While I’m sure it’s only for my own good and will pay off in the future doesn’t mean I have to be happy about it. I hope the investment is a waste. I hope it will fail and I hope it will not affect me as a PR student or professional. Now that I’ve gotten my Twitter bashing out of the way I do believe it is a great PR tool, when used correctly! I believe many of the uses are frivolous and pointless but it can be very powerful in the right person’s hands. I’m not sure that it will become a billion dollar empire but I do believe it to be profitable. I’m unsure what these investments will do to improve the site and it will really rely on that to determine the success or failure. If the additional funding is used correctly I’m sure it will be successful. I personally would not invest in it solely for the fact that I don’t like to invest in products I don’t believe in or actively use. While some uses are great the rest I just can’t get behind. I’m sorry but I just really don’t care what Ashton Kutcher had for lunch today. These investments show that Twitter is something people believe in and want to see really take off. It will defiantly impact my PR future and despite my best efforts will not be able to escape.

  5. wwillis says:

    This is incredible! And I don’t know what all the skepticism is about. Twitter is a wonderful tool for the extensive tool belt of all PR professionals. If you think Twitter is just about the latest updates from your celebrity idols, you’re very wrong. This article and all we learn in our classes prove that Twitter is not just some run-of-the-mill web site. Businesses have found a free way to disseminate important informatin and engage in important conversations with their followers. So, yes, I do think this heavy investment is worth it.

  6. bjohnson says:

    I completely believe that Twitter is worth a lot of money. With users all over the world it is no surprise. I also feel that Twitter will change and become something newer, flashier and more sophisticated as time goes on. Perhaps improving the Twitter platform is where that nearly one billion dollars will go. Only time will tell.

    With nearly thousands of users joining Twitter all of the time, I can see why the talk of so much money is surfacing. Other social media sites are gaining fiscal momentum so why not the tweet platform too? It makes sense that it would also carry monetary weight. One billion is a lot but I predict that Twitter we know now is just the beginning. More money plus more people will have it changing in no time.

  7. sferrer says:

    Claudia- I absolutely agree that Twitter will not lose its social networking worth like MySpace because Twitter is highly respected for serving as a business model. Twitter may potentially lose public interest if they charge news feeds (tweets) via text message. I wonder if the social media platform will put prices of Iphone apps? I would not have downloaded the Twitter app into my Iphone if it was not free. I also was not knowledgeable about how Twitter received its start. Thank you for sharing that information.

    Brittany- I also thought: how can you put a price tag on Twitter with the infinite information released to the public? I am really curious to how these investments will make the Twitter empire grow. There are people who are not as technology savvy and still question the purpose of the micro blogging site. Additionally, a mass of people do not want to publicize their daily activities and lives. When more of the general public becomes aware of how Twitter can benefit individuals and organizations, I believe millions and millions of people will join the Twitter bandwagon.

    Ashley- I believe 2010 will be a huge year for Twitter. Eventually, I think we will be seeing television commercials and celebrity endorsement ads about the social media platform. I could not agree with you more on how Twitter reached its popularity. News organizations and their viewers/readers can comment on certain issues and stories. Twitter has by far been the most successful with two-way communication.

    Samantha- I am certain that Twitter’s fate (good or bad) will affect PR students and professionals. If Twitter’s business escalates then there will be an emphasis for social media not for just PR students and professionals but for others (marketing, business, and communications) as well. We live in a capital country and entrepreneurs who claim they do not want their businesses or incomes to grow are lying. I did not see the unlimited information that people publish (i.e. what Ashton Kutcher ate for lunch) on their tweets as a weakness prior to your comment. I’m convinced Twitter has more strengths but I’m glad you brought that up.

    Whitney- Twitter is definitely not all about finding out what your favorite celebrities are up to. Politicians, universities, religious institutions and more are using Twitter to connect with their stakeholders. For the first time, we have the best communication tool available to us. It will be interesting to see how Twitter will re-invent itself. Twitter is very useful to get messages out there and other social media sites like Facebook are mimicking the same word-of-mouth concept with the tagging (@) option.

    Britnee- We are in this gray area of what Twitter will do with these investments. Maybe, Twitter will fix how the tweets democratize. Now that Twitter is a billion dollar empire, I hope people will recognize its worth and seriously start using it for business and professional networking reasons.

  8. bihrig says:

    2. I am a little shocked that Twitter has that much money inverted into it. I heard of Twitter for the first time in January and was required to sign up for it. For the longest time I didn’t use it and thought it was ridiculous. I have started using it a little more but still not so sure on if I will continue. I think twitter is a fad and will disappear in a few years. Something bigger and better will come along and take it’s place. Just like Facebook did to Myspace.

    I’m sure they will start making money by selling advertisements that will appear on every page. That is what happening to Myspace and Facebook. Twitter will definitely be around for awhile but I’m not so sure about long term. I would certainly never invest in Twitter personally but I could see some companies investing. While I don’t think Twitter will be around in ten years, I do think it is important for organizations to use it as a means of communication today. Keeping up with the trends is where many organizations fail. Trends a constantly changing and weather you like it or not Twitter is the trend now. So you can either jump on the bandwagon or be left in the dust. As a PR student I think it is important to keep up with the trends in communication whether you like the new trend or not. It is apart of your job.

  9. glindsay says:

    That is an insane amount of money to invest in a company! Especially one that, like you said, doesn’t have a lot of profit opportunities. However, Twitter has quite literally exploded in the past year with a 1000% increase in the number of users, which would definitely make it look profitable in the eyes of investors. I just think these investors need to be careful, because it will definitely hit a ceiling and level out eventually, and who knows when that will be? I’m also interested to see what they do with all that money to further develop the site!

  10. sferrer says:

    Britney- You brought up a great argument. It’s very important for PR professionals to keep up with current trends and issues because they can affect clients and organizations. Twitter is the trend right now and businesses or people who have not already adopted the social media site as a communication tool are missing opportunities. In our future professions, it’s not all about us and if we personally like or dislike Twitter. It’s all about what we can do for our clients.

    Greg- You, I and others also are astounded by the huge amount of money being invested. I really hope the limelight did not affect the decision to invest in Twitter. I found from Twitter’s blog the investment firms (Insight Venture Partners, T. Rowe Price, Institutional Venture Partners, Spark Capital, Benchmark Capital, and Morgan Stanley) that are receiving lots of media exposure for their investments. I’m definitely going to keep up with this story and see how Twitter will change.

  11. ncano says:

    I have to say I am a Twitter addict. I follow Cronkite Professors and local businesses as well as celebrities (my guilty pleasure). However, I have been using it to find a job since I will be graduating in December. Of course I was skeptical at first because Twitter was used for businesses and news, now it’s slightly turned into Facebook with people saying what they are doing. There is a right way and a wrong way to use Twitter.

    However, I think that it’s a smart and useful tool in social media. I believe that with all the revenue Twitter is getting, their investments will be practical (at least I want to believe that.) I am no web geek by any means, so excuse me for the terminology. I believe the investments that Twitter will use that money for will to expand their web site. The “fail whale” will not be in existent as much as it is now meaning the server won’t over load because they will have a larger server to host more profiles on. Also if they were smart they would hire someone that would take care of the questions of unanswered problems. However, I don’t believe that it should be a paid for service. If the owners/creators/employees are useful with the investments being made for Twitter, “billion dollar” company then the web site won’t fail as much. I am interested to see what Twitter does in 2010. How does it expand? How does it stay current? Kind of like Facebook. It keeps changing and some people like it, but most hate the updates and what not that happens when Facebook gets a bright idea to stay current and make it easier or harder to use.

  12. sferrer says:

    Nathalie- The investments going into Twitter’s Web site expansion will most likely happen. Interactive television is going to be a big thing in 2010 and I think Twitter will tie in their business with the new technology. The biggest and most recognizable companies like Microsoft have upcoming interactive TV projects and if Twitter uses their investments wisely, they will also invest their money into these new products/services.

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