When I see Twitter ads for SaaS offerings or software tools, I actually read them. On FB, I'm very good at completely ignoring the ads.
For all the data that Facebook is said to collect, they actually don't have much on me besides friends I barely know, pictures of my child, some political rants and jokes liked.
Twitter on the other hand has a list of people with which I share interests and they can do targeting based on that list. Which is exactly what they are doing and for me it worked. I'm actually amazed that they aren't doing better on paper.
FB could easily double their ad content and still be usable. Is that true for twitter?
Seriously, what do you do for 1 hour per day?
And don't get me wrong, because I've seen some folks spending a lot of time on FB, I've got at least one family relative doing it, but those are the losers that are IMHO only worth targeting by soda and beer companies.
Twitter only failed at b); its user base should be enough to generate a nice profit.
In the real world, first, setting up and maintaining such a system would have substantial initial and operating costs (and possibly engagement costs, as it would complicate the UX), and, as opt-outs feom advertising would tend to be weighted toward the wealthier, more valuable (to advertisers), users, it would drop per advertising revenue per remaining advertising-supported user. So the buyout cost would have to be substantially more to break even.
Where Facebook succeeded and Twitter failed was 1) building and growing a massive, highly engaged subscriber base, and then b) monetizing them.
The reality is, Twitter's DAU growth YoY has flat lined at around 300M while Facebook is nearly four times that and growing steadily.
Meanwhile, Twitter user engagement is somewhere around 3 minutes a day. Facebook? 10 times that.
The result: Twitter's ARPU is around $6. Facebook? Over double that, just north of $13 (both US numbers).
So while the media may love to mention them, my view is this is just a reality for the product. It's niche to begin with, and its focused on very small, bite-sized content that doesn't encourage prolonged engagement.