Twitter recently filed regulatory documents indicating that it had sold $400 million in new shares. Internal sources indicate that the same investor has advanced a matching $400 million to give insiders a shot at liquidity. This should keep their foot off the IPO accelerator. $800 million is serious money by any standard.
Who is the investor?
It’s none other than DST Global (formerly Digital Sky Tecnhologies). It’s the same Russia-backed investment group that took a serious - and similarly structured - stake in Facebook in 2009. DST has been happy to spread the wealth to others in the social media game, including Groupon and Zynga.
Yuri Milner (age 49) is DST’s founder. Beyond being an investor of note in social media, he came to the attention of Bay Area residents last spring when he bought a $100 million house in Los Altos Hills. It’s the most expensive house ever sold in the U.S.
The jury is still out on whether Twitter can deliver an advertising model that justifies its $8 billion valuation. Revenues are estimated at $200 million annually and, though it runs second to Facebook in advertising placements, it lags far behind in the rear view mirror. One needs to bear in mind, though, that Twitter is a newcomer to advertising. It began collecting revenue in April, 2010.
That said, DST and its cadre of associated investors are not the type to roll the dice and cross their fingers. One has to believe that a careful assessment of Twitter’s go-forward revenue options has been made, and given the thumbs-up.
According to data published by eMarketer this week, Twitter has quadrupled its number of advertisers in 6 months to 600, and re-signed 80% of them for campaign renewals.
As I wrote yesterday, Twitter ranks second to Facebook in terms of current and planned Ad campaign use by marketers (87% to Facebook’s 98%). However, only 36% of marketers claim satisfaction with the results from campaigns run on Twitter versus 69% satisfaction on Facebook. That’s a 2 to 1 advantage in Facebook’s favor.
Twitter stills has a long way to go to tune its advertising model. After only 5 quarters in the game, though, it has made noteworthy progress. If the volume of email I receive daily pitching white papers on how to use Twitter to drive revenue is any indicator, the market has already placed its bet on Twitter figuring out its revenue model. Soon, and effectively.
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