How the Twitter IPO Will Impact the Future and Social Media

author-image
Mariam Noronha
Updated On
New Update
future of twitter ipo

Since LinkedIn and Facebook decided to take the IPO route, people have been anticipating the Twitter IPO as well. The question here was not as much as a "whether” it will happen, but more of a “when” it will happen.  With all social media majors queuing up with IPO, it is time for the micro blogging major Twitter IPO to arrive as well. The message is loud and clear “Start taking Twitter seriously!”

What are the initial thoughts about the Twitter IPO among industry leaders?

Industry experts say that Twitter is on track to earn up to $1 billion in ad revenue by the end of 2013. It has become the referred network for TV shows looking to engage their audience on the second screen, local businesses seeking to build relationships with their communities and non-profits seeking donations. But what does the Twitter IPO mean for business in general and social media in particular?

Here’s what the industry experts think what the future will hold for Twitter:

Gaurav Mendiratta, Founder & CEO , SocioSquare

Twitter is at a run rate of making about $582 Million this year according to eMarketer.

With these revenues and with over 200 Million active Tweeps, it can easily get a valuation of about $17- $20 Billion. Twitter's clean and non-obtrusive ( to a large extent) advertising has immense potential specially in local advertising. Their recent acquisition of MoPub, a mobile advertising start-up, also shows their commitment to mobile, which is where the BIG growth in advertising will come in. I strongly feel that Twitter's IPO would be a blockbuster, better than both LinkedIn and Facebook!

 

Amit Pande, Partner & CMO, Tiramisu New Media Solutions, India

 I'm sure twitter is hoping that their's is not like Facebook's and more like LinkedIN's - very low profile, share values doubled in a short span.

this should be good news for digital marketers, as twitter will now be forced to focus a lot more on their revenue streams. they have a lot of catching up to do in this area compared to Google and Facebook.

I'm hoping that their attempts at finding new revenue streams are not as bizarre as some of Facebook's, post IPO - for example - $10 to email anyone on Facebook, $100 for writing in to Zuckerberg, a lot more to write in to celebrities and worst of all - promoted posts for friends n' family!

Take a look at the impact this IPO will have on the future of business and social media:

Let us first consider the implications of the IPO on Twitter:

1. Funding for Operations and Expansion

IPOs are generally seen as a means for companies to garner additional cash for operations or expansion. According to analysts, in Twitter's case, the capital gains from going public will enable the company to make heavy investments in hiring, operations and acquisitions.  The implications of an IPO are profound for Twitter, mainly because the capital gains could help the site expand its ecosystem among different users like consumers, marketers and developers.

2. Leveraging its use as a Big Publishing Tool

Twitter is a social network, but it is also a big publishing tool. In recent years the site has grown to become a place that doesn't just connect people, but enables companies to connect with consumers by publishing new forms of content on the site.

3. Boosting Television marketing

An area that has been generating interest at Twitter is television marketing. In July, Twitter announced the national availability of a TV ad marketing program to enable TV marketers to dish out branded content to people on the site, if those users were tweeting about certain shows. Last month Twitter went a step ahead and announced its acquisition of Trendrr to be able to analyze those TV-related tweets better, which is something that could be accelerated through the IPO.

4. Doing More

Going public may also see Twitter do more with analytics and video.

Investors and Consumers are other groups this IPO will impact, here’s how:

1. Investors and Investment Decisions

With Twitter disclosing its sales and profits, investors will be equipped with the means to establish valuations of other social media companies that offer details of their sales. It will now become possible to compare valuations of Twitter with those of, say Facebook, LinkedIn, and GroupOn, impacting future investment decisions in social media companies.  Thus, benchmarking with established valuations of social media companies will become more of a norm.

2. Consumers

For consumers, more IPOs by social media majors will mean the buffet of free services might soon become a thing of the past as social media players start to focus on revenue.

Let’s not forget how the IPO will impact marketers and advertisers

1. Paying for sponsored tweets will pay off

A study commissioned by Twitter from the research firm Datalogix—found that companies that are up to date with their tweets end up selling more products than those that don’t. Paying for sponsored tweets was found to generate more sales instead of simply engaging in the unpaid side of the social network. Thus companies using Twitter to leverage their marketing activities will benefit more offline as well as online.

2. Television Advertising and Twitter

Earlier this week, Nielsen (NLSN) released a report which indicated that a higher level of activity on Twitter increases ratings on television 29 percent of the time. Twitter has been making concerted efforts to push itself into television advertising. Additionally, what is worth noting is the fact that TV-ratings gains also led to more tweeting almost half of the time.

So if you are using Twitter to market your brand, the IPO means you get more buzz on Twitter by simply adding this bit to your promotional messages. Everyone on Twitter,as well as the rest of the world, is bound to be talking about the IPO-- so build the buzz around your messages now. In the future, things could be looking up for brand advertising on Twitter and television.

What other social media companies can learn from the Twitter IPO

The Timing

The Twitter IPO comes at a time when the US economy is seeing a revival, but global tensions are triggering stock market crashes and fluctuations in the prices of gold and silver. Investors are not the enthusiastic lot they used to be, and if one were to go by the lukewarm response the Facebook IPO has received, one can only wonder at the response the Twitter IPO will get.

If it does well, it could set the tone for IPOs by social media companies in the future; but if it doesn’t, it could make others sitting on the fence think twice about IPOs..

How to manage Prelude to IPO

Social media firms don’t really have a good track record of how to generate hype before an IPO.  Just days before Facebook (FB) went public, General Motors (GM) decided to stop paying the site for advertising while making it known that it saw little benefit to paying for sponsored posts. It took more than a year—and dramatic improvements in its mobile performance—to bring Facebook shares above the IPO price for the first time, which happened only very recently.

Twitter releasing reports from its study commissioned from research firm Datalogix could be one way in which the microblogging site has chosen to set the backdrop for its IPO. Giving people data and statistical information about the impact that Twitter has on marketing and branding, both online and offline, is one way of winning the confidence of investors ahead of an IPO.

To wrap this up, the Twitter IPO will certainly impact the future of business and social media. It comes at a time when Wall Street investors are asking a lot of questions. Its journey from a Social Network To Media Giant has in fact already begun, and the IPO is just one more step towards accelerated growth for Twitter.

Twitter IPO Twitter Advertising twitter business Facebook IPO future of twitter ipo ipo impact social media companies twitter television marketing