Overseas, Twitter cites access, privacy and Kakao among its biggest challenges

Twitter reveals the difficulties of monetizing its service internationally

Twitter's headquarters on Market Street in San Francisco

Twitter's headquarters on Market Street in San Francisco

Twitter doesn't seem to have a problem attracting users in international markets, but it definitely has problems making money off them.

More than 75 percent of Twitter's 218 million "monthly active users" reside outside the U.S., the company revealed in its IPO documents made public on Thursday.

International revenue, however, made up only 25 percent of Twitter's total revenue for the three months ended June 30, 2013, the company said. That's a big gap Twitter wants to fill.

To make more money, Twitter has good reasons to look across the pond -- compared to the U.S., the number of its users is growing at a faster rate in many international markets, Twitter said in its documents. Among them: Argentina, France, Japan, Russia, Saudi Arabia and South Africa, the company said.

In those markets and others, Twitter's user base may grow more quickly than the company's revenue. As a result, Twitter said it needs to increase its revenue from the activity generated by its international users in order to grow its business.

That will be hard though, given numerous issues around Internet blackouts, privacy, smaller competitors and differences in advertiser expectations, Twitter said in its IPO filing.

For starters, Twitter is a service based on having Internet access. In some ways, therefore, Twitter is at the mercy of private and government owned service providers who hold the keys to that access. Access to Twitter is blocked in China, for instance, and other countries like Iran, Libya and Syria have intermittently restricted access, primarily for political reasons, Twitter said.

"Governments in other countries may seek to restrict access to our products and services if they consider us to be in violation of their laws," to the detriment of Twitter's users and operating results, the company said.

And in countries where Internet access simply is not all that great, people may not take advantage of certain Twitter features, like rich media in tweets, Twitter said. This could cause problems if Twitter wants to do more overseas with advertising products offered through, say, its Amplify program. Amplify lets broadcasters like ESPN and BBC America place video clips in users' feeds.

And then there are emerging markets like India, where people access Twitter through basic "feature phones" instead of smartphones or the Web. That's not good, Twitter said, because it "limits our ability to deliver certain features to those users and may limit the ability of advertisers to deliver compelling advertisements."

Different countries may also have different laws around privacy that could hamper Twitter's ability to offer certain ad products or analytical tools in those countries, the company said. In particular, foreign data protection, privacy, consumer protection, content regulation and other laws and regulations are often more restrictive than those in the U.S., Twitter said.

The European Union, for instance, has traditionally taken a broader view of what types of data are subject to privacy and data protection, Twitter said, and some proposals that are pending before various regulatory bodies "could significantly affect our business," the company said.

There is one regulation tied to the 1995 European Union Data Protection Directive being considered that may include stricter operational requirements for companies that process personal information, Twitter said. Twitter does not collect extensive personal information from its users such as their age, Twitter said in its filing, but that may change with the introduction of new laws, or just new thinking on Twitter's part.

Google has already run into some trouble in terms of how its user data policies are interpreted by regulatory authorities in France.

There are differences in the competitive landscape too that could be problematic for Twitter. The company's obvious competitors include Facebook (which got nine mentions in the filing), Google, LinkedIn, Microsoft and Yahoo, but there are smaller ones overseas.

In South Korea, for instance, Twitter said it faces intense competition from Kakao's messaging service, which offers some of the same communications features as Twitter does.

There's also China's Sina Weibo, a microblogging website, and Line, a Japanese calling and messaging app.

These types of established international competitors, Twitter said, may impede its ability to increase its number of users and ad sales in those markets.

Advertisers might also have different demands in different markets, Twitter said, such as during times of political upheaval, or may not be familiar with all of Twitter's various ad products.

In its IPO filing, Twitter reported total annual sales in 2012 of US$317 million. Eighty-five percent of that came from advertising.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

Join the Good Gear Guide newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags business issuesadvertisingInternet-based applications and servicesSina Weibosocial networkingsocial mediainternetFacebookLineGoogleKakaofinancial resultsSEC Filingstwitter

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Zach Miners

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Matthew Stivala

HP OfficeJet 250 Mobile Printer

The HP OfficeJet 250 Mobile Printer is a great device that fits perfectly into my fast paced and mobile lifestyle. My first impression of the printer itself was how incredibly compact and sleek the device was.

Armand Abogado

HP OfficeJet 250 Mobile Printer

Wireless printing from my iPhone was also a handy feature, the whole experience was quick and seamless with no setup requirements - accessed through the default iOS printing menu options.

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?