Everyone knows what Twitter is, but do you know how does Twitter make money? And all of those who know about Twitter also know about Elon Musk’s attempt of buying the company for $43B. Though in hindsight the response to this attempt seems clear as day that, Twitter was not about to be sold, there were speculations that the deal might happen. Now that the speculations have officially been debunked as the deal was not made, it leads us to wonder how Twitter makes money if they don’t want Elon Musk’s $43B.
How does Twitter make money?
Twitter Business Model
Currently, Twitter makes money predominantly through two ways advertising and data licensing. In 2020, the company had seen $3.7 billion in revenue, which was an increase of 8.8% from 2019. Twitter’s main competitors are other social media platforms, for example, Facebook, Instagram, as well as Pinterest.
Twitter continues to ramp up its current revenue streams all the while experimenting with new potential revenue sources from both consumers as well as businesses. The company believes that its revenue channels still have the ability to grow rapidly, it looks to double its revenue in 2021.
The ways Twitter currently makes money are:
1. Twitter Advertising
Twitter makes the majority of its money through advertising, representing about 86% of the company’s revenues. Promoted advertising includes promoted ads, follower ads, and trend takeovers. All ads are always marked as “Promoted” on the Twitter feed.
Promoted Ads are nothing but regular Tweets that advertisers purchase to expose their product or service in front of a wider group of viewers. You will generally be able to see promoted ads from those you follow. Whereas Follower Ads suggests new Twitter accounts for you to follow based on your interests, Trend Takeovers place ads next to trending topics to receive views based on what is most popular and relevant on Twitter.
Twitter ads vary in cost. A promoted tweet can cost anywhere from $0.50 to $2 per action. whereas a promoted account may cost $2 to $4 per new follower. Promoted trends vary widely; hence, it can cost as much as $200,000 per day if it has to be aligned with the most popular topics on Twitter.
2. Data Licensing
Data licensing makes up about 14% of Twitter’s revenues. Don’t be fooled by the low 14% contribution. This accounted for nearly $509 million in 2020, which is up by 9.2% in 2019. This mode of revenue sells subscriptions to public data to companies as well as developers. The data provide insights both in real-time as well as historically regarding platform trends as well as user demographics.
People have the ability to follow Twitter news to see how it develops new ways of monetizing the platform as well as the resources. Though it is still in its infancy with regard to monetization, there is a lot of room for growth.
Though the business has not been without its fair share of controversies for questionable information dissemination, Twitter is already one of the largest social media platforms on the Internet. Thus, providing it a lot of room to continue expanding its revenue streams.
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