Twitter Business Model | How Does Twitter Make Money?

Company: Twitter
CEO: Jack Dorsey
Year founded: 2006
Headquarter: San Francisco, California, USA
Number of Employees (2018): 4,100
Public or Private: Public
Ticker Symbol: TWTR
Market Cap (2018): $23.69 Billion
Annual Revenue (2018): $ 3.042BBillion
Profit |Net income (2018): $ 1.206 Billion

Products & Services: Brizzly, Easy Chirp, Favstar, Gwibber, Gnip, fflick, INQ, Hotot, HootSuite, Tweetbot, TweetDeck, Twitdom, TwitPic, Twitterfall, Twitterrific
Competitors: Facebook, Whatsapp, SnapChat, Instagram, LinkedIn, Pinterest, Reddit, Quora, Youtube

Social media has changed how the business world operates. Twitter is no exception in this regard. Twitter remains one of the most famous social media sites in the world and continues to grow at an accelerated pace.

This growth has not gone unnoticed by corporations who have formed partnerships with the site to promote their brands, products, and services.

In fact, Twitter has now become a medium where one can launch their own brand and establish their business. It takes the right amount of clicks, likes, shares, and retweets to secure that level of success.

Business Model Canvas of Twitter

1. Key Partners of Twitter

Twitter’s primary partnership has always been with its users who access the website every day. The same users then utilize Twitter’s platform to promote their business, products, and services through news articles, TV Shows and advertisement.

The service has also formed significant business partnerships with both startups and established corporations alike giving the platform more credibility within the business hemisphere.

2. Key Activities of Twitter

Some of the more direct activities of Twitter include its web development and maintenance which has been strongly effective.

Its other activity is its App Development which makes it convenient for its users to access the service through their mobile devices.

Their maintenance of user data thereby protecting the privacy of those having legitimate accounts is also a valuable activity. Their hashtag “#” management has remained critical in its uniqueness and is quite distinct from the other social media sites especially in terms of the viral component.

3. Key Resources of Twitter

Twitter’s first major resource is its own platform. It utilizes the service to expand its customer base that transcends continents and nationalities.

Its network allows connectivity and communication between different people.

On the other hand, Twitter’s technological advancements in digital social media circle have been lauded as revolutionary and on par with Facebook.

It continues to evolve and adapt every year garnering the attention of new users along the way with its impressive reach.

4. Value Proposition of Twitter

Some of Twitter’s value propositions include its following of people around the world guaranteeing them connectivity and communication at their convenience.

It allows people of all backgrounds and nationalities from different continents to interact with each other and share everything with them including news, cultures, and lifestyles.

Twitter’s real value proposition is audience reach at lightning fast speeds.

5. Customers of Twitter

Twitter’s very platform stands entirely dependent on its customers. They are its main resource and revenue generators. Anyone with an Internet can simply open up their site, log on to their account and kickstart a connection with different people. They can utilize this platform to showcase their views, talents, and opinions.

6. Customer Relationships of Twitter

The website and Apps of Twitter make for a direct communication line with its customers. Customers have so far entrusted much of their privacy on twitter for this very reason.

It is a website that aids them in understanding its entire mechanism through its guidelines. It basically operates as a self-taught website.

7. Channel of Twitter

The Internet serves as the most important tool for Twitter to channel its services to its users. If there is no digital connection, there is no room for twitter.

The same is the case for its website. Access to its platform is of fundamental importance to its existence. It is used to secure more users and generate revenue every day.

The developer tools and apps that it has invented along the way have served their own purpose with respect to channeling its services.

8. Cost Structure of Twitter

The cost structure of its platform is mostly associated with its data maintenance. Which is then followed by its website development. Other cost structures depend upon its platform which is its own website, marketing which it allows businesses to utilize and grow, as well as customer service that serves as a crucial element from which Twitter’s business incurs the most revenue for its sustenance.

9. Revenue Stream of Twitter

Twitter’s revenue models tend to vary considering the constantly changing digital landscape. It amasses a generous amount of its revenue from its advertisements used mostly by companies and enterprises.

They can come in a variety of ways like banners and video ads that can be shared through clicks and retweets.  The promotional element of the tweet sent out by Twitter users enables it to gather the most likes and the most retweets garnering more revenue for Twitter in the process.

Apart from the tweet itself, the entire Twitter account serves as a revenue generator for Twitter on its own level. Many famous figures eventually secure a verified status which establishes their trust with their followers.

Twitter is a medium that is driven by its trending topics that are pioneered by hashtags. Users scramble to click and participate in these hashtags thereby increasing more traffic for the site. This allows Twitter to accumulate more revenue for its website and thrive accordingly.

How Does Twitter Make Money?

Advertising

Twitter’s entire platform has been utilized by many companies (startup or otherwise) to advertise their products and services thereby, expanding their customer base online.

Twitter has competed extensively with other social media platforms like Facebook and Instagram in order to generate maximum traffic.

Approximately 86 percent of total revenue comes from Advertisement.

Many business models seek to increase their finances through advertisement, but only a handful like twitter or Uber have succeeded in doing so.

Promotional Tweets

Twitter in and of itself is a promotional hemisphere for brands and businesses alike. The tweets it allows users to receive help these respective companies to reach out to a new customer and expand their base.

Twitter users are exposed to different kinds of tweets on their feed. But thanks to the verified handles, they can confirm the authenticity of those brands and are more receptive as a result.

The point is to get more viewers and allow them to explore different ad campaigns in order for them to be marketed at an accelerated pace especially if they can go viral. Any preferred or favorite tweet can then be liked or retweeted allowing the company to garner more users.

Promoted Accounts

Promoted accounts especially those that are verified or confirmed to be authentic enable users to trust and access their promotional tweets and follow them accordingly.

The more followers they receive, the more they grow in popularity. This drives the viral element of the business and allows Twitter to become a marketing business entity of its own kind.

Promoted Trends

Everything that trends online whether its entertainment, politics or business enters into the hashtag section of Twitter. The more the users respond to whatever is trending online, the more they will be receptive to the product or service being offered.

Every user wants to be kept updated and on top. They retweet and even subscribe to avoid being kept out of the loop. They can come from any location depending on the choice of residence of the user.  All promoted trends have their version of tweets that are in turn promoted by users. This accelerates the product’s popularity.

Advertisers are charged as a result of those tweets depending on the number of retweets they generate. It takes a number of clicks to make it possible. One viral tweet a day can cost 250,000 dollars in the US market.

Data Licensing revenue

Twitter has been undertaking steps to grow its data licensing revenue with a model that approaches markets, channels, products, and pricing in a more brand-oriented manner.

Twitter generates data licensing revenue in two ways :

1. One is by offering data licenses and products that enable their partners to search and access historical and real-time data on their platform and analyze them accordingly. Their analysis also includes which data comprises Public Tweets.
2. The second method is by utilizing their MoPub exchange to provide mobile advertising exchange services. Twitter’s data partners operate for a fixed period when purchasing data licenses to access all or a part of their data.

Twitter also receives service fees from the transaction it makes through the mobile ad exchange. Twitter’s mobile ad exchange has proven beneficial for both buyers and sellers alike in terms of them being able to purchase and sell advertising inventory.

Four companies are used by Twitter as their data re-seller and who have immediate access to every tweet by the site.

Twitter also managed to generate 333.3 million dollars in revenue in 2017 from data licensing and other revenue.

Firehose

Firehose offers twitter another alternative to gain more earnings. However, these services are limited to chosen companies and businesses. Owing to its system, twitter shares six hundred million tweets every day to such companies.

Search Engine

Search Engine has become a vital element in Twitter’s money-making operation. Twitter charges enable the search engine to display their streaming search results and in turn charges them for the entire process.

Twitter has held long term partnerships with Yahoo! and Bing of Microsoft which is why it was considered a major competitor to Facebook’s online hegemony in the social media landscape.

In Conclusion

Twitter has immortalized its position within the business environment. Hardly any business that wishes to expand its business and revenue operates without it. At this rate, it will become an obligatory entity for every business worldwide.

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