For the past 12 months, Twitter’s Australian usage has remained around 2m people per month. That’s 2m people – not 2m unique browsers – and that’s consistent (plus or minus 5% either way) since mid 2011 (according to Nielsen).
Add mobile traffic and the third party clients (Hootsuite etc) and the number is probably closer to 2.5m, maybe 3m.
So … here is this platform doing very solid, consistent numbers in Australia. It has a lot of data on its users and even now still has a tonne of hype. Combine that with its relatively sluggish US revenue (in comparison to its current valuation) and Australia’s relatively high yield when it comes to digital advertising (far higher than the US and the majority of Europe) and it’s odd that Twitter hasn’t done what Facebook has done in Australia and set up a sales only office.
My thoughts … Twitter setting up a sales office wouldn’t be a bad idea. The rationale:
- Twitter will be warmly received by media agencies and creative agencies.
- Most clients are familiar with the platform and at best involved and at worst intrigued
- So with the above 2 elements the hardest part isn’t that hard … doors will open for Twitter (which they don’t for a lot of digital media companies)
- Twitter has strong mobile growth opportunities and has made a decent first attempt at placing ads on the mobile version. I don’t believe any of us have cracked mobile advertising in Australia (aside Google and mobile paid search) and my feeling is, when the formats are cracked, mobile advertising in AU could really boom.
- Twitter has pretty solid information on users and, so far, respect for this information. You can’t see it throwing 10 ads on a page and allowing every DSP and network on the platform … but you can see it trying to work out a mix of formats that don’t annoy users but also provide a measurable return to advertisers.
- Given the majority of the AU media spend comes out of 2 territories, Twitter could open with a Sydney only office at least for the first 18 months and commute regularly to Melbourne (and Brisbane). Once Melbourne delivers required revenue (say 4x costs to have a dedicated office) then they could open in Melbourne
- Twitter in year 1 could most likely generate $4-$7m AUD of revenue, with the potential for $10m in year 2. This is most likely solely through media agencies. If there was a self service platform this could add to it and provide an in for smaller, direct clients (who are often lower spending but higher time requirement). With a 6 person initial setup (Country Manager, 2 x Sales Manager, 2 x Sales Exec, 1 x Ad Operations OR Creative/Strategist) you’d think that salaries and on-costs (rent, travel, comms, office expenses) wouldn’t exceed $1.5m
- Linkedin and Facebook have already taken this approach over the last 3-4 years and it’s worked well. They started with modest setups and have grown them slowly in line with revenue.
- Based on my estimates of revenue and costs the operation could be cash positive from year 1 – it wouldn’t be an international expansion fund sap, moreso a positive source of revenue.
Twitter CEO Dick Costolo said back in January “We have figured out the business,” he said. “The advertising model is working.”
So … if it’s figured out. Why isn’t Twitter monetising it’s 2m+ users in a market worth almost $3b?