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How Does Twitter Make Money?


Twitter (TWTR) is a social media company founded in 2006 that provides a platform for users to publish their thoughts, interact, share content and read breaking news.


The company’s revenue totaled $787 million in the first quarter of 2019, an increase of 18% year-over-year. It also saw a 11% year-over-year growth in monetizable daily active usage during this period.


“We’ve never been more confident in our strategy and execution and see a great opportunity to grow our audience and deliver even more value for advertisers,” said Ned Segal, Twitter’s CFO, in the earnings press release.


But how does Twitter make money? Read on to find out.



Advertising

Twitter earns at least 86% of its revenue from advertising. In the fiscal year 2018, the company posted an advertising revenue of $2.61 billion, which was a 24% increase from what the social media site earned in 2017. For Q1 of 2019, advertising revenue reached $679 million, an increase of 18% year-over-year.


Twitter generates most of its advertising revenue by selling promoted products, including promoted tweets, promoted accounts and promoted trends, to advertisers. The company creates tailored advertising opportunities by using an algorithm to make sure promoted products make it into the right users’ timelines, “Who to Follow” lists or at the top of the list of trending topics for an entire day in a particular country or globally. Advertisers also have the option of paying for in-stream video ads delivered to a targeted audience or sponsoring video content from publishing partners.


A small portion of the advertising products Twitter sells are placed on third-party publishers’ websites, applications and other offerings.



Data Licensing and Other

Fourteen percent of Twitter’s revenue in fiscal year 2018 was from data licensing and other sources. This revenue totaled $425 million, an increase of 27% compared to 2017. In the first quarter of 2019, data licensing and other revenue totaled $107 million, an increase of 20% year-over-year.


Twitter sells subscriptions to public data beyond its public API to companies and developers looking to “access, search and analyze historical and real-time data” on the platform. Data is sold in two levels of access – premium and enterprise.


The “other sources” includes service fees Twitter collects from users of its mobile ad exchange, MoPub.




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Written by sortiwa

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