Twitter is as we all know, the most popular platform to share one’s own thoughts with the world. It allows the users to tweet his/her opinion in a “microblogging” format. Started almost 10 years ago, Twitter has now a daily active user base of 100 million with almost 500 million daily tweets. From finance minister to popular celebrities, from a common man to world leaders, Twitter has become the sound of everyone.
Twitter definitely has an enormous importance yet seems to be losing its value little by little. To be spoken financially, both its stock price and active users numbers started falling. Possible reasons might be Twitter never considered changing their business model yet looking for a stable or a rising profit.
We’ll discuss how Twitter works, and how the most influential social network makes its money.
Twitter: What is it?
In 2006, Twitter was founded by Jack Dorsey, Noah Glass, Evan Williams, and Biz Stone, with an idea to send text messages as status. It has its headquarter in San Francisco, California. Twitter ranks officially in 9th position in the list of 10 top popular social media websites, and was one of the “10 most visited websites” in 2013. From President Obama’s goodbye tweet to raising money campaign for Houston, Twitter has proved itself the most pertinent platform for news breaking.
In the last few years, social media platforms have changed the way the ness world operates and Twitter has played its significant part. Today, a public tweet breaks faster than the media. But what makes a social media website really valuable is the number of users and this is where Twitter is having a hard time. With social media platforms like Facebook, Instagram taking over twitter, it now faces the question of whether or not it can compete with these evolving social media giants.
So in light of all these, questions might arise what is Twitter’s business model and how do they make money.
Twitter’s Revenue Model
The largest source of revenue of Twitter, like any other website, is an advertisement. They make around 80% to 85% of their money from showing advertisements. But what makes Twitter different from any other website is that they sell data licensing which is also called Firehose. Every day millions of users are tweeting and these tweets hold the preference of people in certain areas. Twitter sells these data to companies that want to buy them for analysis for selling a product in a particular area. Another example is, many of us love football and supports a club, so the club before investing millions on a player, will buy data from Twitter to analyze which player is now popular and which is not and then bid the player and offer the price.
Another way Twitter makes money is through Twitter Ads. Hundreds of millions of people are visiting Twitter to discover what’s going on, and Twitter Ads offers traders audiences to connect with, in exchange for charges.
Twitter offers a promotional hemisphere for brands and businesses. It allows users to receive promotional tweets from companies and in turn, helps that company build a larger customer base, which is beneficial for both ends.
Twitter also earns revenue from videos run on the site like Youtube or Facebook. Currently, they get a share of 30%.
Partnerships and Takeovers
Twitter’s foremost partnership always has been with the users. However, companies like Magic Pony, Periscope, Gnip came under Twitter’s acquisition. The largest acquisition TellApart which is a digital advertising platform worth $479 million was a losing deal for Twitter.
How is Twitter Making Money?
To be precise, Twitter makes the majority of its revenue from advertisements. Twitter’s platform is a great place for startups or any grown business to expand its customer base. In return, they have to give away a percentage of their profit.
The second big way Twitter earns money is by selling data licensing. Twitter can sell user data to companies for business and market analysis. Other ways of Twitter’s revenue-earning include ad exchange, promotional tweets, search engine operations, etc.
Around the end of 2019, Twitter generated revenue of over $1 billion, a huge 22% increase than its previous quarter. Currently, Twitter holds the share price of 27 USD which has fallen from its peak valuation of 69 USD. So, which are the facts stopping Twitter earning more revenue?
Firstly, there is no avenue for a user to talk to multiple persons at the same time on Twitter. People can only send one personalized message at once, which is an obstacle when it comes to efficiency.
Secondly, according to Twitter, 340 million people tweet per day on Twitter. With the abundance of new tweets entering on a daily basis, individual user has the possibility to bury and tweets might go unnoticed by spectators it was intended for. Measuring the number of tweets read, too, is difficult.
Thirdly, unlike other platforms, Twitter has a character limit when posting. A user has to make tweets concise, one has only 140 characters to share his voice, so there is no place for exaggeration. There are no limitations for the number of followers of a person but after one is followed by 2000 people, the person is monitored for unlawful tweets.
So holdbacks like these definitely coming in the way of economic progress of Twitter, and they should consider building an improved business model with these hurdles removed.
What Can Twitter Do?
So considering all facts, what can Twitter change to come out of their current downflow of profit is they can introduce premium accesses. One might pay a particular amount to gain access to the paid services of Twitter. But these services have to be super exclusive, or it might actually lead to lesser traffic than before.
Twitter can also introduce an annual or half-yearly subscription system which will give users a unique perk and services which will depend on the subscription they choose. However, Twitter has to shift its position from Social networks and become a media network because the platforms Twitter competing with are completely free.
Irrespective of the circumstances, Twitter never considered adding bots, or sought unfair means to play parallel with its competitors. It does not allow spamming either. Also, thanks to the verified handles people no longer fall for the faltered famous accounts.
So it is obvious that Twitter is a dependable and convenient way of interacting with people and sharing their unique thoughts and content. But unlike many social media networks, the personalization is absent and probably this is why it is losing its popularity. Sticking to this same business model might risk further growth for Twitter.
However, it is not in our hands to change the way Twitter earns, or meddle in the business model. For users who like to increase their twitter fan following, You may see the best sites to buy twitter followers blog. We can only wait for Twitter’s decision to change the business plan. If they don’t think about reworking on it then there is no telling how long it will last.