Twitter made $500,000 selling data access. Most of their revenue comes from advertising. Musk is talking about selling subscriptions as a way to generate more money. I'd like to know who their "data licensing" customers are. It's all very innocent until it's not.
This is a breakdown of their current business model:
How does Twitter make money: Analyzing the Revenue Model
Anyone can create an account to tweet their views instantly with a global reach and all this is for free. This leads us to the question What is the revenue model of Twitter?
The source of revenue in Twitter’s case is divided into two categories:
- Advertising Services: This is the large chunk of the revenue pie, having contributed $3.2 billion, i.e., 86% of the revenue generated in 2020.
- Data Licensing: Providing paid access to data accounted for a revenue of $0.5 billion i.e., the remaining 14% of the revenue in 2020. Though on the smaller side, it has the potential to increase manifold in the future as data about users and their preferences gains more importance in the consumer-centric world.
Advertising Services
Advertising services generally comprise of Twitter exhibiting promoted products in the form of:
Promoted tweets: Of all the tweets that appear on a user’s timeline, a specific type is the one labeled as “promoted”. Based on the user preferences, their likes, and dislikes, Twitter algorithms try to feature promoted tweets on user timelines that may pique their interest in the product or service. This gives brands a chance to enhance their visibility.
Promoted accounts: Twitter provides suggestions to users about “Who to follow.” This is based on user preferences, demographics, location, and overall activity on the platform. It can help a rookie brand promote itself or even an established brand to boost a new campaign and go viral. Promoted accounts are a way for advertisers to create a community of users on Twitter who are curious about their product or services.
Promoting a trending topic: Hashtags display the pulse of the trending topics. For instance, #crypto is one of the popular hashtags nowadays due to the globally rising curiosity for cryptocurrency. A promoted trend is displayed on a per-day per-geography basis.
Data Licensing
Twitter generates revenue in data licensing through two ways:
- Providing data products and licenses that permit Twitter’s data partners to access, search and analyze historical and real-time data comprising public tweets and their content.
- Offering mobile advertising exchange services through the MoPub exchange.
I'm not on twitter and so I have no visibility into what might change after they cut Russia off. If you or anybody who uses twitter notices changes that might be relevant to this action by Twitter, I'd find it interesting if you shared your observations.
thehill.com
