These six slides explain everything about Twitter’s ad business

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This week, Twitter held its first “analyst day” where the company shared details of its plan for the service, its future and how it believes it will increase revenue from its users.

“We want Twitter to be nothing less than the very best way to keep up with your world,” CEO Dick Costolo said at the beginning of the event. “We have a goal to build the largest daily audience in the world.”

Particularly of interest to the advertising industry are six slides explaining how the company derives revenue from its advertising arm.

Twitter reported its ads brought in $320 million last quarter. Its figure of active users – 284 million – is still well below the near-billion users on Facebook, but Twitter isn’t sitting on its hands to generate revenue.

The six most important slides from the presentation look at how Twitter reels in rev via those ads you’re seeing creep into your feed:

Twitter claims its number of advertiser is close to 60,000. Twitter noted it has 9 million “potential” small-and-medium business advertisers.

Twitter ad slide showing 'growth drivers'
Twitter ad slide showing ‘growth drivers’

Promoted video remains a burgeoning ad format for Twitter, which introduced it in August. Twitter says its earned to paid ratio for video ads are at an impressive 6:1

Twitter slide showing its video ad figures
Twitter slide showing its video ad figures

New ad formats such as video and website cards generated an additional $93 million for Twitter in the third quarter of 2013.

Showing Twitter's ad revenue by format breakdown

Twitter broke down details about its ad load, the rate of ads per piece of content, and how it rests well below rival Facebook’s rate. Anthony Noto, Twitter’s CFO, estimated it will max out at 5 percent, far higher than it is today.

Twitter slide of its ad load rate

But how to attract those “logged-out” users on Twitter? The company says it receives over 125 million logged out visitors on its homepage alone, and noted the potential to bring ads to those users.

Flickr photo of Twitter CEO Dick Costolo by user TechCrunch

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