Oct 12, 2021

Twitter Business Model

According to the Twitter business model, it monetizes its users’ attention A database for advertising and licensing data. Nearly $3 billion in advertising revenue was generated last year, representing approximately 86.5% of its revenue. 13.5% of the revenue is related to data licensing (over $465 million) that was primarily used by enterprise clients for their analysis.

Origin Story

Podcast ingestion and syndication were conducted through Odeo, a directory and search engine website. At the time, the company was feeling the pressure of other giants in the market (Apple), as well as other companies vying Due to this, Odeo decided it was time for a “reboot” for the company as it moved While working at Twitter in 2000, Jack Dorsey thought about a service for real-time blogging from the road. As they broke the company into teams to brainstorm new ideas and figure out what to do, Dorsey came up with the idea of LiveJournal. As part of a brainstorming session, Jack Dorsey explained to the team that he had an idea for a service that would use SMS to notify small groups about what you were doing. That idea made so much sense, by March 2006, a test had begun.

At the time, Jack Dorsey was just putting the finishing touches on the idea he had first brainstormed, which would initially be called Twitter. Biz Stone, Evan Williams and Jack Dorsey founded the company in the early 2000s knowing they wanted to develop an instant mobile message system, SMS, and a tech space platform, and twitter (which references nature as bird sounds) was the name they came up with. The name twitter.com had already been registered by a bird enthusiast. As a result, they had to use twttr.com initially. The Twitter project started in March of 2011, but it was six months before Twitter.com became the domain name which has stuck up to today. In an environment where Odeo was losing ground, it was difficult for the group to explain the value of this new project to the board of directors. The project was eventually undertaken by a new corporation that was formed just to manage it. When the project launched six months after it was launched, Jack Dorsey was one of the engineers working on what would ultimately be called However, there was one interesting aspect – people could not still rely on a platform that enabled those SMSs if they had to pay A tweet at the time meant that the phone would be billed for messages conveying what the user was doing at the time. It was neither convenient nor entertaining, despite how entertaining it might have been. The problem was that there was no character limit, so a long message would be broken up into multiple messages, which would only raise the phone bill. It was obvious that they would need to change the message’s anatomy. 

A Twitter team led by Jack Dorsey was the main promoter of the platform and he showed us the power of the tweet as a way of expressing our opinions of the world.

2007, Twitter had gained popularity, and Jack Dorsey began to lead the company. The number of unique visitors on Twitter had grown 752% since December 2008 to 4.43 million (an increase of 752% over Even though Twitter grew very quickly, its platform wasn’t stable, and Jack Dorsey was not considered capable of staying as the CEO. By 2008, Dorsey had to leave his CEO position at Twitter (he founded Square in 2009 after being fired from Twitter). The growth of Twitter remained constant in 2009, however. As well, that was the year when Facebook overtook Myspace in terms of In 2009, Twitter’s popularity reached the point where celebrities like Ashton Kutcher, Britney Spears, Ellen DeGeneres, Barack Obama, and Oprah Winfrey all used it. The platform had a user base of 160 million by the end of 2010, and it began to monetize with It is safe to say that model will stick, even if Twitter only becomes truly profitable After Jack Dorsey returned as CEO of Twitter in 2015, he’s split his time between just Twitter and Square since then.

Twitter revenue model explained

As a result of advertising and data licensing, Twitter generates revenue.

Twitter Advertising Services

According to Twitter, its advertising revenues are generated by the sale of Promoted Products such as

Promoted Tweets revenue stream

“Promoted Tweets” appear in a user’s timeline, search results, or profile page just like an ordinary Tweet, no matter what device the user is using. Twitter uses its proprietary algorithms to detect the interests of different users and target Tweets that might be relevant to them. A promoted tweet will be billed via an auction if it is based on performance or impressions

Promoted accounts revenue stream

Accounts that are branded “promoted” allow advertisers to build a community through a system that uses an auction system that prices ads based on performance

Promoted Trends

Typically, advanced trending topics or timelines, marked as “promoted,” appear at the top of the list of trending topics for the entire day, be it worldwide or for a particular country. The monthly fixed fee for promoted trends is $75, plus a $4.50 handling fee

Data Licensing and Other

The following revenue streams are generated by data licensing

Data licensing revenue stream

The platform provides access to historical and real-time data consisting of public Tweets and their content for partners to view, search, and analyze

Twitter MoPub exchange revenue stream

The exchange is a mobile ad exchange in which Twitter receives service fees from transactions made on it. A marketplace for purchasing and selling advertising inventory, this is a marketplace where buyers and sellers trade The price is set by the seller and is matched by the buyer

How big is Twitter advertising business?

Only advertising services generated over $2.9 billion in revenue for the company in 2019. Furthermore, if we compare those numbers with Google and Facebook advertising revenues, we can gain a better understanding of how much of Twitter’s digital advertising revenue in 2018 was digital.

What are the Twitter key metrics? The factors that affect Twitter growth

There are a few critical metrics that every company monitors every day, every week and every month. According to Twitter, these are the metrics that measure its success

Monthly Active Users (MAU) MAUs

Changes in metrics causing the business to suffer, such as change in monthly and daily active users and change in ad engagement. Twitter revenues are greatly affected by the growth of users as measured by MAUs, by changes in DAUs as measured by monetization trends as measured by advertising engagements.

How does Twitter spend its money?

For the company to maintain and operate its technical infrastructure, money is spent on data centers for co-located facilities, lease and hosting expenses, and traffic acquisition expenses (to enable advertisements placed on Twitter to appear on the websites of third-party publishers). A monthly spend of over $1 billion (30% of revenue) reflected the company’s 2019 spending. In addition to spending money on product development, engineering, and research, Twitter uses these resources for growing its infrastructure and business. According to Twitter’s annual report, more than $680 million was spent on R&D in 2019. The company also spends more than 900 million dollars in sales and marketing (26% of its revenues). Sales and marketing activities also fall under this category.

Twitter: from platform to publisher?

A fact-check from Twitter was posted about President Trump’s tweet in May 2020, so the Pandora’s box opened up. It has been common for years (at least in the United States) to regard Facebook and Twitter as communication platforms. Initially they acted as companies that facilitated communication, but were not the ones involved in officially publishing it, so they had wide leeway in allowing the development of their platforms. According to the recent debate, if Twitter were treated as a publisher, it would be liable in the event that offensive content was published on it, and this would have a very substantial impact on the business model and potential liabilities of the company.

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