Twitter is positioned for some nice growth in the coming months and years, according to a report released Tuesday by eMarketer. However, that growth largely will be occurring in emerging countries. What makes that trajectory problematic in the view of some investors is this: It was Twitter’s U.S. user base that accounted for close to three-quarters of the company’s total ad revenue in 2013.
Twitter’s user base will increase 24.4 percent this year, eMarketer said in its first-ever forecast of Twitter growth worldwide. However, it is decidedly maturing in the U.S., and by next year Twitter’s gains are expected to taper off into single digits.
The Asia-Pacific Growth Story
The Asia-Pacific region this year will account for 32.8 percent of all Twitter users, compared with North America’s 23.7 percent. Asia-Pacific will more than double North America’s share, at 40 percent, by 2018. If China is added to the mix — Twitter currently is banned there — the region’s share will be even larger.
India and Indonesia are expected to post increases greater than 50 percent this year — and not due to rapid growth from a small installed base, eMarketer pointed out. Rather, India and Indonesia will rise to have the third- and fourth-largest Twitter populations in the world in 2014, with 18.1 million and 15.3 million users, respectively. Both countries will surpass the UK for the first time in user numbers.
This doesn’t mean Twitter’s demise in the U.S. is around the corner.
“The U.S. remains Twitter’s largest market by a wide margin, well ahead of the second-biggest market, Japan,” Debra Aho Williamson, a principal analyst at eMarketer, told the E-Commerce Times.
“The appeal of Twitter is strong, but the company has not done a great job of helping people understand how to use it,” she continued. “The slowing growth rate in the U.S. is reflective of that fact.”
Going forward, “we expect Twitter to continue to use TV tie-ins to draw attention to itself and to enhance its product with more features that will encourage U.S. users to stay committed to the service and also get new users to try it out,” Williamson said.
Twitter has other things in its favor, noted Adaptly President Sean O’Neal.
Advertisers want to target precise audiences, like people who have expressed interest in their products or who have visited their website, he told the E-Commerce Times. “These audiences can be difficult to find unless you are targeting them on platforms with a large reach. … Twitter combines reach with precision.”
Also, Twitter generates massive amounts of data that can be leveraged for very some sophisticated advertising executions, O’Neal said. “The more users there are on the platform, the more activity; and the more activity there is, the more data.”
Twitter’s Mobile Story
Some advertisers might be discounting the potential mobile will play in the company’s future, suggested John Milinovich, CEO of URX.
“Twitter’s stream is one of the first examples of an information feed that works across all devices and form factors,” he told the E-Commerce Times. “With their purchase of MoPub, it’s clear that they are doubling down on their mobile strategy and will look to take what Twitter’s uniquely good at — the interest graph — and extend its reach beyond the walls of Twitter.”
International Ads to Come
Another business strategy that is still a work in progress at Twitter is its international ad platform, said eMarketer’s Williamson.
“We believe Twitter definitely has a lot of room to grow internationally,” she said. “It only gets one-quarter of its ad revenue from outside the U.S. right now, and as international usage grows, the ad products will need to keep up.”
One reason Facebook has gotten a lot of revenue from outside the U.S. is its self-serve ad platform, which lets any advertiser with a credit card place ads on the service, Williamson noted.
“Twitter has a self-serve system but it has not fully opened it up to all international markets,” she pointed out. “Having a solid self-serve system that is available in many markets will help Twitter to increase its non-U.S. ad revenues.”