Twitter's Overlooked Data Business Could Grow As Retailers Mine Chatter

It Won't Challenge Advertising, But More Businesses Will Rely On It

By Published on .

When thinking about Twitter's future, almost all the focus is on advertising. After all, 85% of its sales came from ads in the second quarter. But some observers believe Twitter has lots of room to expand its other revenue stream: data.

In the first half of this year, Twitter collected $32.2 million through its data licensing deals with authorized resellers, an increase of 53% from a year earlier. That kind of growth is nothing to scoff at, but it was overshadowed by ad revenue, which more than doubled over the same period to $221.4 million.

Twitter headquarters 3x2
Twitter headquarters 3x2

Twitter said in its IPO filing that it expects data's contribution as a percentage of revenue to continue to decline, presumably as ad revenue continues to blossom.

Still, Twitter is treating data like a precious commodity. In 2011, for instance, Twitter turned off the spigot that pumped tweet-data into Google's Realtime search.

Going public could raise Twitter's status with advertisers and agencies, and more media spending will prompt more demand for its data, said Craig Elimeliah, VP of creative technology at agency RAPP. "There's definitely a lot more planned around integrating Twitter into various aspects of campaigns and not just for the vanity of integrating Twitter," he said.

Twitter offers access to its so-called firehose of tweet data through resellers DataSift, Gnip and Topsy. The cost for accessing Twitter's data depends on how often a customer taps into it.

Gnip CEO Chris Moody said his company has seen an increase in the types clients buying access to Twitter data, and how it's used. "More and more business use cases will rely on Twitter data," he said, noting that the "low-hanging fruit" of marketing uses has expanded to include sales intelligence, supply chain and product development uses. A retailer, for instance, might learn from Twitter data why a product hasn't sold well in recent weeks.

"Twitter analytics is moving beyond just the Cokes and the Nikes … to industrial parts suppliers," he said, adding that there's potential for "exponential" growth in overseas markets. Gnip has clients in 30 countries, said Mr. Moody.

Mr. Elimeliah suggested that as brands become more global, Twitter's "target for growth is definitely going to be international."

Most Popular