Twitter recently held an IPO and is currently trading over $40 a share. But does it deserve that valuation?
Based on the company’s financial earnings, potential investors are right to be skeptical: the company lost $69m (gigiddy) over the first six months of this year.
Obviously, those who purchased TWTR expect that number to go up (in the absolute sense) given the fact that the company’s revenue nearly tripled between 2010 and 2012 to $317m. But that sort of prognosis can’t be based solely on faith: there has to be some reason to believe Twitter has figured out how to make money.
I’m here to report that it hasn’t.
85% of Twitter’s revenue comes from advertising. In theory, this is not a terrible idea. Twitter can tell a lot about you based on what you have to say. Indeed, over 100 studies mining Twitter for data have come out over the past year alone! And this trend is nothing new.
And even without access to your tweets, it’s possible to discern personal information based solely on who you follow — and I don’t just mean in the sense of Why is Anthony Weiner following a harem of strippers? I mean that it can tell where you are, what you enjoy, what religion you practice, what you eat — without even reading your actual tweets.
A few years ago, I came across a Twitter-based app that composed a profile of me based solely on who I follow. And it was scarily accurate: it guessed, among other things, that I am Jewish and a vegetarian. [Editor’s note: If you know the name of the website, please remind me!]
But it seems that Twitter is incapable of applying this wealth of intrusive personal information to determine what ads should be targeted at a given audience.
Take me, for instance. I have sent numerous tweets from Seattle. I follow Pete Caroll on Twitter. My most common single Tweet is “Russell ‘the man’ Wilson.” And still, Twitter’s ad service thought the following was worth displaying in my timeline:
Continue reading Twitter and NFL team up to run one classy Thanksgiving advertisement