Twitter (TWTR) is a social media company that provides a network connecting users to people, information, ideas, opinions, and news. The company’s services include live commentary, live connections and live conversations through mobile devices and the Internet. The company can also be used as a marketing tool for businesses.
How Twitter Makes Money
Twitter earns 86 percent or more of its revenue from advertising. In the fiscal year 2017, Twitter posted an advertising revenue of $2.1 billion, which was a six percent decrease of what the social media site brought in during the same time in 2016.
Twitter uses promoted tweets, promoted accounts and promoted trends. Twitter also sells promoted tweets to marketers, and these then appear in users’ Twitter feeds. The company creates tailored advertising opportunities by using an algorithm to make sure promoted tweets make it into the right users’ timelines. Promoted accounts are those paid for by an advertiser that Twitter places in targeted users’ “Who to Follow” list.
Twitter makes additional money through data licensing. Though advertising revenue decreased year-over-year, 2017 data licensing and other revenue increased 18 percent, resulting in a three percent decrease in total revenue. Twitter has named four companies “official data resellers,” and these companies have direct access to all tweets. Each company has developed algorithms for data mining that measure consumer response to everything from brands to movies. Television shows and digital media brands are heavily invested in Twitter data — often promoting live tweeting as a means to gauge interest and response during event coverage or a broadcast.