Twitter has a lot to prove in 2011

Twitter Inc. gained more than 100 million registered members this year and approached the new year with a fresh investment of $200 million.

Now the San Francisco firm must prove it can live up to its newly elevated valuation of $3.7 billion.

So “2011 is the year where they’re going to need to increase their user base pretty dramatically and prove to advertisers that Twitter advertising works,” said Debra Aho Williamson, an analyst with the online research firm eMarketer Inc. “Right now, the advertising is mostly experimental.”

In 2009, Twitter’s growth was fueled by members who followed celebrity tweeters like Ashton Kutcher. In 2010, Twitter pushed its role as an vital source of news and information, which turns the 140-character message into a new mass-media channel.

And that could ultimately help the company justify the investments it has received.

“Twitter is very much an ‘of the moment’ information network,” said Augie Ray, a social media analyst for Forrester Research Inc.

“When you look at the way Twitter has driven the news cycle over posts about earthquakes in Haiti or weather reports or what Lady Gaga is doing, you get a picture of how vital Twitter is beyond the pure numbers of people who access it on a daily basis,” he said.

For Twitter, the past year has been marked by change and growth. New Chief Executive Officer Dick Costolo called 2010 “one of the most meaningful years” in the company’s history, which may not say much since Twitter was founded in 2007.

2010 moves

Still, during the year, the microblogging service:

— Promoted Costolo in October from chief operating officer, a go designed to elevate the company’s push to develop revenue sources. The former Google executive (and onetime stand-up comic) replaced co-founder Evan Williams, who wanted to focus on developing Twitter itself.

— Introduced new advertising platforms called Promoted Tweets, Promoted Trends and Promoted Accounts. The company was already making a small profit from licensing access to its Twitter stream to search engines like Google and Microsoft’s Bing.

— Added more than 100 million registered members, to bring the total to 175 million worldwide, with 65 percent living outside the United States. Those members sent more than 25 billion tweets this year.

— Bought the company that made Tweetie, a well loved third-party Twitter application for the iPhone. That signaled Twitter’s go to gain more control over how users accessed the service on mobile devices, and the firm later released official iPad, BlackBerry, Android and Windows 7 apps.

— Increased its workforce from 130 to more than 350, and that’s up from 25 in early 2009. The company projects it will max out its current South of Market headquarters sometime in 2011 and is in the market for additional space.

— Introduced a major redesign of Twitter.com to make it simpler for members to access Web pages, video and other material linked in tweets.

— And earlier this month, Twitter capped the year by landing a major round of investment led by renowned Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, which chipped in $150 million. Another $50 million came from previous investors. The new round brought the total the company has raised to about $350 million and raised its valuation to $3.7 billion, up from about $1 billion last year.

The influx of cash ratchets up expectations for Twitter’s future.

“Every time a new, higher valuation is announced, it increases pressures and expectations,” Forrester’s Augie Ray said. “But I have to say the execs at Twitter don’t show much sign of pressure. They seem confident and assured.”

Outside research shows Twitter is still far less well loved than Palo Alto social-networking giant Facebook Inc., which has more than 550 million members worldwide. A recent Pew Internet & American Life Project study found that only 8 percent of adult Internet users in the United States – equal to about 6 percent of the overall adult population – use Twitter.

Following along

And, according to new research from Sysomos, a social media analytics firm, the service is less about sharing and more about following.