Twitter Business Model | How Twitter makes money?

Ria Puneyani Ria Puneyani
Nov 19, 2021 6 min read
Twitter Business Model | How Twitter makes money?

With 206 million daily active users worldwide as of the second quarter of 2021, Twitter, symbolised by the renowned bluebird, grew from the ashes of a failed company named Odeo to become the #1 platform for discovery and generally regarded as the Internet's SMS.

It originated as a text messaging network that limited tweets to 140 characters (now changed to 280 characters). One of Twitter's co-founders, Jack Dorsey, sent the first tweet on March 21, 2006, with the message "just setting up my twttr." Twitter has evolved to be one of the most popular social networking platforms in the last decade, with over 200 million monthly active users.

About Twitter
Twitter Business Model
What distinguishes Twitter from other social media platforms?
How does Twitter make money?
Conclusion
FAQs

How Twitter makes money? | Twitter Business Model

About Twitter

Twitter is a social networking and news website where users exchange brief messages known as tweets. Biz Stone, Jack Dorsey, Evan Williams, and Noah Glass launched it in 2006 after another firm, Odeo, was stung by the introduction of Apple's iTunes. Twitter's headquarters are located in San Francisco, California.

You may send tweets to everyone who follows you on Twitter, hoping that someone will find your remarks valuable and entertaining. Unregistered users can only read tweets, but registered users may send, write like and receive tweets.

Microblogging is a term that might be used to describe Twitter and tweeting. Despite being 15 years old and having over 300 million monthly active users, the network is still in its infancy in terms of revenues. And, because the platform is free to use, it's not immediately obvious how Twitter makes money.


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Twitter Business Model

Twitter makes money from its users' attention in two ways: advertising and data licencing. Advertising generated 87 per cent of company income at over $1.05 billion in 2020, up 87 per cent. The remaining portion is data licencing, which increased by 9% year over year to over $137 million, mainly due to corporate clients using data analysis.

Although marketers pay to depend on the number of clicks or retweets, a pre-determined advertising budget is specified at the start of a campaign. Advertisers may also utilise streaming video advertisements on the site to target a specific demographic. Content producers may use features like live streaming and video on demand to expand their worldwide reach and user engagement.

Twitter makes money from data licencing in two ways:

It provides data products and licences allowing Twitter's data partners to search, access, and analyse historical and real-time data derived from public tweets and their content and it also provides mobile advertising exchange services through the MoPub exchange.

What distinguishes Twitter from other social media platforms?

Keeping things clean and clear is the way to go, whether the goal is to build a personal brand, advertise a product/service, or do anything else that attracts public notice. What could be better than a platform that allows you to communicate with the rest of the world in just 280 characters?

Twitter promises to take all reasonable steps to prevent authorised parties from misusing data. It follows the Digital Advertising Alliance Self-Regulatory Principles for Online Behavioral Advertising. Twitter implemented labels in November 2020 to alert users about the possibility of error in the information provided in a tweet. This community users includes people from many areas of life. Twitter allows anybody to immediately communicate their thoughts and opinions with the rest of the world.

Only when the user has given their consent is personal data shared with digital marketers. Twitter's privacy policy lays out all the options and urges users to read it to see how their data is used.


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How does Twitter make money?

Twitter uses these sources to make money.

Advertisements for Promotions

Advertisements provide for the majority of Twitter's revenue, and users can view various advertising on the network.

Advertisers who want to reach a larger audience or increase interaction from their existing followers can purchase Promoted Tweets, much like average Tweets that users can engage with. Using its proprietary algorithms, Twitter algorithms aim to display sponsored tweets on user timelines that may spark their interest in the product or service. Promoted tweets allow companies to increase their visibility.

Promoted Accounts is a way of gaining followers by promoting one's account to related individuals. Users can get recommendations for "Who to follow" on Twitter which is determined by user choices, demographics, geography, and overall platform activity. It may assist a new brand in promoting itself and an established brand in boosting a new campaign and making it viral. Advertisers may utilise this to build a community of Twitter users interested in their products or services.

Promoted Trends Hashtags give you a sense of what's hot right now. Promoted Trends are a 24-hour high-impact takeover of Twitter's Trends list, according to Twitter.

They appear in the first or second slots in the "Trends for you" section, in a user's timeline and the "Explore" page, and are used to launch something new or relate to present conditions. Businesses can subscribe to Twitter for a fee.

Businesses may extract valuable insights from this data using various complex analytical tools at their disposal, allowing them to better respond to customer demands.

Data Licensing

Partners can use Twitter's data licencing offering to access, search, and analyse real-time Twitter data made up of Public Tweets. Twitter distributes about 500 million tweets with data partners every day, but only with a few firms.

Exchange MoPub

Twitter's MoPub Exchange is a mobile advertising exchange that connects advertisers to sell ad inventory with buyers eager to acquire it. Twitter is paid a fee for each transaction that takes place on the exchange.

Conclusion

Twitter's business strategy has stayed constant throughout time, and the company is still aiming to become profitable but has failed to do so.

Despite all of its grandeur, excitement, and effect, its stock performance has been terrible, and many have dubbed its business model "broken." Twitter has experienced several losses over the years, and the beatings will continue until the business model is adjusted or changed.

It's a harsh reality that monetisation has been a challenge for Twitter, and rumours abound that corporations like Disney and Salesforce may be interested in acquiring the company.


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FAQs

Who created Twitter?

Twitter was created by Jack Dorsey, Noah Glass, Biz Stone, and Evan Williams in 2006.

How does Twitter make money?

Twitter makes money basically from two main sources which are:

  • Advertisement and Promotions
  • Data Licensing

What are microblogging platforms?

Microblogging platforms are platforms for sharing text, image, or video based blog in which content is typically smaller in both actual and aggregated file size. Some of the top microblogging platforms are:

  • Twitter
  • Instagram
  • Tumblr
  • Koo

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