Twitter has grown incredibly fast and now commands an extreme valuation relative to users and revenue per user, compared to peers like LinkedIn (LNKD) and Yahoo (YHOO) which have a far more diversified set of revenue streams.

1. Augustine Fou- 1 -
Dr. Augustine Fou
http://linkd.in/augustinefou
January 2014
Investment Thesis:
Twitter (TWTR)

2. Augustine Fou- 2 -
Executive Summary
THESIS
• Cautiously optimistic that Twitter can be the recipient
of branding dollars shifting from traditional (offline)
channels like print and newspapers, to sustain revenue
growth and therefore current multiples.

3. Augustine Fou- 3 -
Executive Summary
TWTR
• Twitter’s revenues are entirely ad supported
• The CPM cost of their ads are over 10x higher than
Facebook
• Twitter’s revenue per user is half that of Facebook
• There are many significant threats to users staying on
Twitter to view content since content can easily be cross
posted to other platforms like Facebook
• There are already signs of “slowdown” or “plateauing”
of users from the recent Monthly Active Users data

4. Augustine Fou- 4 -
Where Twitter “Fits”
2012 - $107B
2016E - $104B
branding performance
Television 65% ($70B, 2012) Digital 35% ($37B, 2012)
Display
(Facebook)
22%
Search
(Google)
46%
Other
32%55% 45%
Broadcast Cable
Television 58% ($61B, 2016E) Digital 42% ($43B, 2016E)
42% 49%
Other
9%51% 49%
Broadcast Cable Branding
(Facebook)
Performance
(Google)
Mainly for branding and awareness,
not as much reach as Facebook

5. Augustine Fou- 5 -
Ad Revenue

6. Augustine Fou- 6 -
Twitter Ad Revenue
Source: Twitter SEC Filings

7. Augustine Fou- 7 -
Operating Income Trend
Source: Twitter via Google Finance
• Cost of revenue trend is
good (lower as % of
revenue)
• Operating expense needs
to be monitored
• Market cap is high relative
to peers like LNKD and
YHOO, who have more
diversified revenues and
upside.

8. Augustine Fou- 8 -
Twitter Revenue vs Net Loss
Source: Twitter SEC Filings

9. Augustine Fou- 9 -
Facebook Average CPM = $0.59
Twitter Average CPM = $3.50
Facebook Average CTR = 0.119%
Twitter Average CTR = 1-3%
Facebook vs Twitter Ads
Source: WordStream, Nov 2013

10. Augustine Fou- 10 -
Twitter vs Facebook CPM
Twitter CPM $3.50; Facebook CPM 0.35
Source: BusinessInsider, April 2012

11. Augustine Fou- 11 -
Types of Twitter Ads

12. Augustine Fou- 12 -
Promoted Accounts
Source: Twitter
Costs
Cost-per-follow
(CPF)
Sample:
$2-5 CPF
Primary Uses
• Gain followers
• Create awareness

13. Augustine Fou- 13 -
Promoted Tweets
Source: Twitter
Primary Uses
• Sharing content
• Amplify message
• Offering deals
• Building a brand voice
• Building awareness
Costs
• Cost per Engagement
(CPE)
• Sample: 10s of cents

14. Augustine Fou- 14 -
Promoted Trends
Source: Twitter
Pricing
$200,000/day
Primary Uses
• Brand building
• Generating awareness
• Associating brand with a
current trend

15. Augustine Fou- 15 -
How Brands Use Twitter –
For Awareness

16. Augustine Fou- 16 -
According to the SMMU study, just 9%
of respondents have used Twitter’s paid
services, although another 44% are
planning to explore them in the future.
Some 17% are apparently unaware that
Twitter even offers paid services. Those
are lower figures than seen in the Ad
Age survey, in which 46.5% of brands
marketing on Twitter were also
advertising on the platform.
Twitter is for Awareness
Source: Social Media Marketing University, March 2014

17. Augustine Fou- 17 -
Upside? Or Concern?
According to the SMMU study, just 9% of
respondents have used Twitter’s paid
services, although another 44% are
planning to explore them in the future.
Some 17% are apparently unaware that Twitter
even offers paid services. Those are lower figures
than seen in the Ad Age survey, in which 46.5% of
brands marketing on Twitter were also advertising
on the platform.

18. Augustine Fou- 18 -
Twitter Users

19. Augustine Fou- 19 -
Twitter User Stats
Timeline
views grew
only 5%,
which
implies
saturation.
This has a
direct impact
on ad
revenues.

20. Augustine Fou- 20 -
Monthly Active Users
This slowdown is
not good news for
Twitter and it may
be a canary in the
coal mine, regardless
of ad revenue
growth (it was 21%
in the third quarter).
The timeline is the
centerpiece of
Twitter's user
experience, akin to
Facebook's news
feed. It's key to
Twitter's long-term
health as a platform.

21. Augustine Fou- 21 -
Twitter Demographics
Source: National Journal March 2013

22. Augustine Fou- 22 -
Twitter Company Stats
Twitter Company Statistics Data
Total number of active registered Twitter users 554,750,000
Number of new Twitter users signing up everyday 135,000
Number of unique Twitter site visitors every month 190 million
Average number of tweets per day 58 million
Number of Twitter search engine queries every day 2.1 billion
Percent of Twitter users who use their phone to tweet 43 %
Percent of tweets that come from third party applicants 60%
Number of people that are employed by Twitter 2,500
Number of active Twitter users every month 115 million
Percent of Twitters who don’t tweet but watch other people
tweet
40%
Number of days it takes for 1 billion tweets 5 days
Number of tweets that happen every second 9,100
TwitterAnnual Advertising Revenue Revenue
2013 (Projected) $399,500,000
2012 $259,000,000
2011 $139,000,000
2010 $45,000,000
Source: Statistic Brain, May 7, 2013

23. Augustine Fou- 23 -
Twitter User Growth
Source: Hubspot

24. Augustine Fou- 24 -
Twitter Users Sensitive to Advertising

25. Augustine Fou- 25 -
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Augustine Fou- 25 -

26. Augustine Fou- 26 -
Dr. Augustine Fou – Agency Czar
“I advise clients on using different
formats of digital ads and defining clear
metrics to show business impact and ROI.
Specifically, clients can use search for
driving traffic as well as insights about
what customers are looking for.”
FORMER CHIEF DIGITAL OFFICER, HCG (OMNICOM)
MCKINSEY CONSULTANT
CLIENT SIDE / AGENCY SIDE EXPERIENCE
PROFESSOR AND COLUMNIST
ENTREPRENEUR / SMALL BUSINESS OWNER
PHD MATERIALS SCIENCE (MIT '95) AT AGE 23
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