Twitter will more than triple its advertising revenue to $150m in 2011 and may reach $250m in 2012 as more companies use it for marketing, according to internet research firm EMarketer.
But if the microblogging site is to compete with larger companies such as Google and Facebook, it will have to boost its user base and demonstrate adverts placed on its pages are effective, said EMarketer's latest report.
Even though Twitter has more than 175 million registered users globally, a December Pew Research Center report said only 8% of US web surfers use Twitter, the research firm noted.
Twitter, which has struggled to find reliable revenue streams since it was founded in 2006, said last month the business was valued at $3.7bn.
The valuation was made after Twitter announced it had raised $200m in a round of founding led by venture capital firm Kleiner Perkins Caufield & Byers.
But competition with Facebook will not be easy and Twitter will have to introduce a do-it-yourself ad service that will not require contact with salespeople to make it easier for smaller and mid-sized businesses, said EMarketer.