Twitter Inc’s (NYSE: TWTR) latest acquisition revealed a bit of how the San Francisco-based company plans to grow revenue.
On Tuesday, Twitter announced that it agreed to acquire Gnip, a Boulder, Colo.-based startup that has spent the last four years collecting, analyzing and selling Twitter's virtual “firehose” of data to brands. By bringing Gnip into the fold, Twitter can cut out a major middle man and sell data directly to companies that use tweets for research, marking, finance and public relations.
“We want to make our data even more accessible, and the best way to do that is to work directly with our customers to get a better understanding of their needs,” Jana Messerschmidt, Twitter’s vice president of global business development, wrote on Twitter's official blog.
Messerschmidt said Gnip has been “crucial” in turning tweets into a valuable marketing product for companies, and that this process has only just begun.
“Together we plan to offer more sophisticated data sets and better data enrichments, so that even more developers and businesses big and small around the world can drive innovations using the unique content that is shared on Twitter,” Messerschmidt said.
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Financial details surrounding the acquisition have not been disclosed. Twitter's first-quarter earnings report, which will be released on April 29, may offer some clues about how much it ponied up for the smaller company.
Gnip claimed that it is one of the largest providers of social data in the world and delivered more than 2.3 trillion tweets to brands in 42 different countries. These brands use tweets for research, marketing, finance and public relations. Chris Moody, CEO of Gnip, said the purchase will help his company grow and scale its services.
“This acquisition signals clear recognition that investments in social data are healthier than ever,” Moody wrote on Gnip’s blog.
When Twitter released its first quarterly earnings report, it admitted that user growth had slowed substantially, threatening its sustainability as an advertising platform. Twitter combatted the problem with a recent redesign of user profiles designed both to attract new users and increase engagement with current ones (which makes them more valuable to advertisers).
The Gnip acquisition also helps Twitter make its current users' data more valuable, and it will boost the revenue it generates from data licensing. Twitter earned $23 million from licensing data to third-party companies in 2013, a 75 percent increase year-over-year. It clearly recognizes the opportunity to grow in this area despite it being a small portion of its overall revenue.
What's unclear is how the Gnip purchase will affect other social analytic companies, such as DataSift. Twitter could restrict those companies' access to its data firehose, effectively killing their current business models, or it could bring them into the fold to prevent other social networks from snatching up their analytic abilities. After all, Apple purchased Topsy, another social analytics firm that used to be a major competitor to Gnip, in December, for more than $200 million.
Twitter has not responded to questions from International Business Times about the acquisition.