Twitter Ad Revenue Projected to Triple in 2011

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For as long as Twitter has been a household name, a favorite guessing game in tech circles has been to speculate on how the wildly popular microblogging service might turn the endless stream of abbreviated musings into a profitable business.

Would it be simple advertising? Perhaps a custom, premium version of the service geared for corporate users? Or licensing agreements to share data with major Web portals and search engines?

But it is ads that grease the gears of so much of what’s free and on the Web, and it only makes sense that Twitter would turn up the dial on sponsored tweets and other commercial promotion.

And that strategy is poised to pay off in a big way, according to new research from the research firm eMarketer.

With Twitter poised to launch a self-service ad platform, eMarketer is bullish on the company’s monetization prospects.

The firm is projecting that Twitter’s advertising revenue will more than triple in 2011, soaring from an estimated $45 million in 2010 to $150 million this year. In 2012, eMarketer is forecasting Twitter to pull in $225 million in ad revenue, with a small but increasing portion coming from sales outside the United States.

Broadly, eMarketer analyst Debra Aho Williamson argues that Twitter’s ascendency as an ad forum could indicate the emerging viability of social media — and not just Facebook — as an essential buy for advertisers.

“If Twitter can grow its user base and convince marketers of its value as a go-to secondary player to Facebook, it will succeed in gaining revenue,” Williamson said in a statement. “In 2011 it must work overtime to give its early advertisers a positive experience.”

Twitter’s emergence as an ad platform of choice comes amid a flight from MySpace, once the dominant social network, and a trend of steep overall growth in the social sector.

eMarketer is projecting ad revenue at MySpace to dip from $288 million in 2010 to $184 million this year, and to tumble further still to $156 million in 2011.

Facebook, meantime, is projected to notch $4.05 billion in ad revenue this year, up from $1.86 billion in 2010. In 2012, eMarketer is forecasting ad revenues of $5.74 billion.

For the aggregate social networking sector, the firm tallied ad revenues of $3.48 billion last year, and is forecasting spending of $5.97 billion this year, and $8.09 billion in 2012.

Kenneth Corbin is an associate editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.