Is Twitter Really Worth $1,000,000,000?

Twitter CEO Evan Williams recently confirmed that the website has received new funding of $100 million, which added to the microblogging site’s previous funding makes for a $1 billion valuation for the microblogging service. Among the investors are Spark Capital, Benchmark Capital, Institutional Venture Partners (all of whom doubled their original investment), T. Rowe Price and Insight Venture Partners.

This may seem surprising to many who questioned Twitter’s ability to make money at all with its free social media service, especially considering that to date, Twitter has yet to earn a dime. Is it realistic to think these investors are going to see real advertising money in the future?

It’s still hard to say. There’s no current online advertising model that seems applicable to a distributed service like Twitter. Twitter has proven invaluable to marketers who use it to connect with their customer base, but so far it’s yet to bring Twitter itself anything of value except its enthusiastic investors.

Ideas for how to use Twitter as a revenue-generating company vary from running keyword ads next to tweets as Google does for its searches and for blog content. However, so far there are no plans to put ads on Twitter until 2010.

Though Twitter has yet to make money for itself, this hasn’t stopped other companies from thinking they have something here. So far Twitter has turned down acquisition bids from Facebook, Google and Microsoft. Thus far, Twitter seems to be sitting on a gold mine that no one knows how to drill.

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