Twitter's Advertising Possibilities Cause Evaluation To Skyrocket

 Like many internet startups, the social networking website Twitter began as a non-monetized venture. The idea was to first get the model working, and then implement a business solution that would bring in profit after the concept was proven. The company, however, is now looking into the possibility of using ads for revenue.

Twitter's newsfeed platform, which allows users to post and monitor updates, has caught on quickly. The added search feature that lets users search for specific topics and tags further helped increase the site's popularity. Twitter has become one of the most important venues for finding fast-paced, user-generated news focused on events that are often happening in real-time.

However, up to now, Twitter is not a profitable enterprise, and the company has started exploring ways of making money. The latest news is that the website is considering serving ads on its microblogging platform. The ads would be targeted according to keywords in Tweets and search queries, as well as on other information and actions related to the user.

Twitter co-founder Biz Stone said that the company is in no rush to implement targeted advertising, and they have explored other ways of generating revenue. For example, last June company board member Todd Chaffee said that Twitter was considering the possibility of allowing people to buy items on their site. Twitter director of business development Kevin Thau had said that the company was pursuing three different revenue streams. They would seek to make money on search traffic, from phone carriers, and also from shared revenue with content providers.

In May, Stone had even told Reuters news agency that ads were not in Twitter's game plan, and that they could annoy users, although he backed off his statements just a day later.

According to TechCrunch, to date Twitter has attracted $55 million in investment, and is seeking another $50 million with a $1 billion valuation. Last February, twitter was valued at $250 million and raised $35 million in its third round of funding.

Twitter began to challenge other major networking sites like Facebook as users found the interface appropriate for very rapid, real-time information exchange and interaction. The site also had an early focus on the large number of young people who text via their cell phones or other mobile devices. Twitter shot up in popularity with unique visits tripling since February. Notable news events often bog down the company's servers, and the death of Michael Jackson this summer nearly shut down the system.

By changing their terms of service to allow ads, Twitter is opening up possible future revenue opportunities. The company is hoping to earn about $140 million in revenue by the end of 2010. The new terms of service also address the site's growing problems with spammers and hackers who have been attacking Twitter lately.

Investors obviously like Twitter's new attitude toward targeted advertising and may repsond with a hefty four-fold hike in valuation since last February. Ads could be appearing on the site now at any time.