How Does Twitter Make Money?

Since its inception, Twitter has grown to become one of the most influential social media networks worldwide. It started as a simple micro-blogging platform where users can comment with others with 140 characters updates. Mostly famous for the new-making tweets from politicians and celebrities, Twitter has become an integral part of today’s global conversations. Apart from it, Twitter also provides a platform for millions of people to connect, interact, share their thoughts and opinions online.

Twitter is free for use for ordinary people to businesses alike. While most individuals use Twitter to interact and engage with others on the platform, marketers use it to connect with their customers. Most companies see Twitter as a platform to humanize their brand and boost their brand awareness. Everyone is free to use this platform for personal reasons. If the platform is free to use, you may wonder how it generates profits and sustains.

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Well, you’re not alone. Today, we will discuss how exactly Twitter makes money and what its revenue sources are. Let’s not wait anymore.

What are Twitter’s Advertising Services?

Twitter foreruns among some of the top social networks worldwide. Twitter’s annual revenue came to 3.7 billion U.S. dollars in 2020. Twitter’s revenue from advertising was 562.0 million dollars in the second quarter of 2021. It makes up 82% of Twitter’s total income during that time. There are three main ways for Twitter to advertise on the platform; promoting Twitter accounts, promoting tweets, or promoting a trend. The companies interested in using Twitter’s advertising platform run custom ad campaigns to target relevant audiences. Advertisers can use any of the advertising options available to increase their visibility. They also get a chance to run in-stream ads that get displayed to their target audience.

While most of Twitter’s revenue comes from advertising, the second primary source of its revenue is its data licensing model. Apart from it, Twitter also generates revenue from selling advertisement inventory placed on other websites and apps.

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As you now know the top source that Twitter generates its revenue, let’s dive deeper into these sources to find more about it.

Revenue From Promoted Accounts

Companies also pay Twitter to promote their business Twitter accounts to gain more visibility and followers. When Twitter user logs into their account, they see a list of suggested Twitter profiles they can follow. It’s up to the user’s wish if they want to follow the profile or not. These recommended accounts usually appear based on the algorithm. Twitter’s sophisticated algorithm considers the user’s typical demographics and shared interests to suggest these Twitter accounts to them. When a company wants to promote their Twitter account using this method, they pay Twitter bidding for the spot. Then, their Twitter profile will appear as the suggested accounts of their target audiences.

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Revenue from Promoted Tweets

Mostly, the tweets that appear in your timeline are from the Twitter accounts you have been following. Apart from these tweets, the promoted tweets also appear in your timeline. Twitter earns money by promoting the advertiser’s tweet on Twitter user’s timelines. Twitter picks these Twitter users based on the targeted demographics, user’s location, shared interests, and the profile they follow. With this information’s help, the algorithm tries to understand what type of tweets users are interested in and promote the company’s tweets accordingly.

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For this, companies run campaigns to promote their preferred tweets to reach their target audience. Usually, the company will pay a fee based on the number of clicks it gets on its tweets.

Revenue from Promoted Trends

Twitter has a separate section to show the top trends on the website’s sidebar if you have noticed. It lists the top recent trending topics of the day. These trending topics can give Twitter users an idea about what stories and news pieces are making it to the top. It’s a huge deal to get listed on this index. Companies can pay money to Twitter to promote trends for them on this list. Such promoted trends are labeled as ‘promoted’ to differentiate among other organic trends.

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Moreover, the promoted trends appear on the top of the list of trending topics. Twitter sells these promoted trends on a fixed per day fee basis. Companies pay a massive amount of money to Twitter for promoting their hashtags on this trending topic list.

Revenue from Twitter’s MoPub exchange

Twitter also earns money from its mobile ad exchange through service fees from the MoPub exchange transactions. This exchange makes it easier for marketers to sell mobile app advertisement inventory on Twitter and the hundreds of mobile apps using MoPub exchange. MoPub, as a business model, works with thousands of advertisers to help them maximize sales and performance on their mobile ad inventory.

Money from Data Licensing or Firehose

Data licensing is Twitter’s second significant revenue stream after advertising, according to BBC. The micro-blogging site tends to sell its public data known as a firehose to earn revenue. The shared data adds up to 500 tweets daily, a considerable number of data for companies. Companies buy this public data to dive deeper into the consumer’s mindset, analyze the trends and sell their findings to different brands and companies. The analysis of firehose data helps the brands and companies to make informed decisions for business growth. Apart from the promoted tweets, accounts, and trends, Twitter generates a considerable amount of revenue by licensing out the publicly accessible data.

How Twitter Earns Money?

Without a doubt, Twitter is an effective means of communication and connecting with people online. As people choose online media to get updates and communicate with others, Twitter generates a fair share of advertisements’ revenue. With over 192 million daily active users and 500 million tweets sent each day, Twitter has many potentials to earn from advertisers globally. Twitter uses all means of advertisements to generate revenue. Companies looking to reach a broader audience use its on-site advertising and pay a definite fee. Apart from it, data licensing also helps Twitter to make money from companies. All these revenue sources help Twitter to earn and keep growing as a leading social media channel in the future.

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By Caitlin Hill

Caitlin is a social media blogger and writes about a range of topics, including productivity, e-commerce, and social media. Caitlin has extensive experience in writing content for multiple social media platforms and services. Helping and guiding people in social media has always piqued her interest. When she is not writing, you can find her indulging in one of her two favourite hobbies - reading and cooking.

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