twitter Business Model – How does twitter make money

Social media platforms have definitely become one of the most important things in people’s lives. Today. You will not find a single person who is not using some kind of social media account. Everyone knows why social media platforms were created in the first place. They were built to connect people through the internet. But over the years social media platforms have gained so much popularity and power. Today social media platforms are not just a medium that will connect you to other people they are much more than that. In the current world, social media platforms are not only being used by normal people but also brands and businesses. This is because people have understood that social media platforms are a great way of promoting their businesses. Not only that but they can also reach a wider audience if they are active on social media platforms.

But not all social media platforms are built the same way. Social media platforms like Facebook offer a wide range of options and features to its users. It is a great platform for people to connect with other people. Platforms like Instagram are great to look at the stories posted by your friends, family, and other celebrities. However, there is one social media platform that is quite simple in what it offers but greatly popular in today’s world. That social media platform is Twitter. When this social media platform was created a decade ago no one would have thought that such a simple concept would become a revolutionary idea. Today there are all kinds of people who are using this social networking site. It has given a platform for people to voice their opinions.

This article is completely about the business model and revenue generation methods of Twitter. Let’s dive into it.

What is Twitter?

As mentioned earlier Twitter is a social media platform. It is definitely one of the most popular social media platforms right now. Unlike most platforms that offer tons and tons of features, Twitter likes to keep things simple. It is mostly known as a microblogging social networking site. But the initial idea of the platform is drastically different from the site that you are witnessing today. Before Twitter, the founders were running a podcasting company called Odeo. One day Jack Dorsey proposed the idea about a platform that allows a person to communicate with a small group of people through SMS. But the name of the site was not always Twitter, it used to be twttr in its initial days. This is because the domain name Twitter was already being used. They changed the name of the company to Twitter when they purchased the domain name after six months.

Jack Dorsey stated that the idea for the name was perfect to define their website. As the word means the chirping of birds as well as a short burst of information. The first tweet was made by Jack in which he wrote ” just setting up my Twitter. But the site was not made available for the public right away. At first, Twitter was just an internal service that was used by employees of Odeo to communicate with each other. Later Twitter was acquired by Obvious Corporation along with Odeo. After that Twitter became its own company. But it was hard to define Twitter because even the founders did not exactly know what it was. Two instances made Twitter very popular. One SXSWi conference and the other is a NASA astronaut posted a Tweet from the international space station. Currently, Twitter has more than 320 million users across the globe.

Business model of Twitter

As mentioned earlier Twitter is a microblogging platform. Here people can post “tweets” to express their views on something. But the catch is that they have to do it using only 280 characters. You can post updates at all times. Not only that but you can also get notifications about the tweets posted by the people who choose to follow. People mostly follow their friends, celebrities, or their favorite brands. It provides a great platform for people to look at other people’s opinions. You have to be a registered user if you want to post a tweet. If you are not a registered user then you cannot post a tweet but Twitter allows you to read the tweets posted by others. You can do it using their website or application. The three main groups who are using Twitter common people, influencers, and businesses. 

Let’s look at what it offers them. 

Businesses

Twitter is one of the best social media platforms for businesses to promote themselves. You may be thinking that it would be hard for people to promote businesses using just 280 characters. But Twitter offers businesses more options to promote themselves. They can post video ads on the platform. But it is also important for them to get the right type of video that suits their context. They will be able to reach a wider audience if their ads are displayed at the right time. If the ad has low relevance to the discourse then they won’t be able to get the attention of the users. When these ads are correctly placed people will notice them and tell about the businesses to others. The ad formats of Twitter suit the platform. All of the advertising features on Twitter are self-served.

Influencers

Both influencers and Twitter are interdependent. Twitter needs the influencers to gain more users and influencers need Twitter to support their activities. The great thing that Twitter offers the influencers is the freedom with which they can express their thoughts. Twitter does not censor the tweets that are posted by the influencers. All of the messages are posted in the same way as they were written without getting modified. You must have heard about viral tweets. If a tweet made by an influencer goes viral then they will get a lot of promotion without spending money. Through the word of mouth, they will be able to generate organic traffic. It is a great platform for them to promote their upcoming events. Film stars, music artists, and sportsmen can keep their fans updated about their activities. This will help them to remain in the limelight.

Common users

Common users have a lot of benefits using Twitter. They can stay updated about the latest news, events, films, and sports. People can follow their favorite celebrities and look at every Tweet made by them. Users also have the opportunity to voice their opinions without getting censored. Twitter does not modify a person’s tweets just because they are not popular. It provides them a platform to express their views on things without feeling inferior to anyone who is famous. Twitter has actually been very successful in giving a voice to everyone irrespective of their social status. You can just see that people are not afraid to speak against powerful people. Many people have been called out on their bluffs and misinformation by normal people. People can provide views to counter fake news which is on the rise these days.

How does Twitter make money?

There are several ways in which Twitter makes money. Let’s look at each one.

Advertisements

At the end of the day, Twitter is a social media platform and the most common source of revenue of social media platforms is undoubtedly advertising. The majority of the revenue generated by Twitter is through advertisements. More than 80% of money generated by Twitter is through advertisements. There are many ways in which a company can promote itself on Twitter. The simplest way is to post a tweet that will appear on people’s timelines. People can even promote an entire account on Twitter.

The advertisers can post videos and images along with their tweets to promote a product or a brand. Twitter charges them depending on the traction generated by them. The advertisers can pay on the basis of pay per tweet or pay per click before posting an ad. They can also bid to show their ads at a particular place. Advertisers make sure that all of their ads are optimized for mobile devices. This is because nearly 60% of the revenue is generated through mobile devices. 

Data licensing

This is another way in which Twitter generates its revenue. For those who don’t know what it is, data licensing is the practice of sharing the data of its users under a legal framework. This means that Twitter shares data such as search history and recent activities of the users with companies. It shares both real-time and historical data with advertisers for money. This data will help the advertisers to come up with ads that will get your attention. They can use this information to make you look at their products next time you use Twitter. 

Conclusion

This is the business model of Twitter. It is a combination of both crowdsourcing and advertising business models. Twitter has become one of the most influential social media platforms of this generation and its popularity continues to grow. By looking at its growth you can be assured that it is not going to lose its relevance anytime soon. If you are interested in other business models like the business model of Uber then you can look at other articles on Zeen.

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