Twitter to SEC: Promoted Trends don't really make us money
The social network disclosed that selling trending topics to advertisers doesn't move the needle all that much.
Twitter makes less than 10 percent of its revenue from the advertising product known as Promoted Trends, the company wrote in a letter to the Securities and Exchange Commission ahead of its public offering.
Promoted Trends sit atop the list of Twitter's trending topics and are offered to advertisers on a geographic basis. The social network for 140-character exchanges charges a flat fee to run the sponsored trends for an entire day.
In the lead-up to the IPO, the SEC, curious about the revenue earned from the fixed-fee product, instructed Twitter to disclose more about it if it was contributing substantially to the company's bottom line. Twitter, however, asserted that the ad unit is rather immaterial to its business, which explains why the final prospectus was devoid of additional details on Promoted Trends.
"The Company respectfully advises the Staff that, in the three months ended June 30, 2013, less than 10% of its revenue was generated from its Promoted Trends product," Twitter wrote in its response. "The Company does not believe that Promoted Trends will have a material impact on the metrics disclosed in the Registration Statement in the future."
Twitter brought inin revenue during the first nine months of 2013, meaning the company likely made less than $42 million from Promoted Trends in the same period. On the high end of the spectrum, the reveal would imply that Twitter is making as much as $154,000 per day from Promoted Trends. That's not terribly impressive considering that Twitter reportedly sells them for a day.