How Does Twitter Make Money?

How Does Twitter Make Money?

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Twitter has had phenomenal success over the social sphere in the past few years. A service which went from not having a business model to finally establishing a successful business and ad model. Unlike Facebook, ads are practically invisible on Twitter. So how does it manage to rake in so much cash without plastering its pages with ads? Twitter uses a promotion based ad model to monetize.

How Much Money Are We Talking About Here?
Before we delve further into its revenue streams, lets have a look at the revenue it has made over the ears.In 2011, Twitter brought in around $139 million through paid advertising. The figure is expected to rise to $260 million in 2012. Although Facebook is easily making billions, Twitter is expected to touch that figure only after 2016. The  projection for 2014 is around $540 million.

Promoted Tweets

One of the first avenues of income to note is ‘Promoted Tweets’. Until recently, Google had access to Twitters storehouse of real-time data. This data was the major source behind Google’s Real-time search.

Major events all around the world would cause a surge in Tweets and Facebook updates which made Google’s Realtime search more prominent and important during such times. However, Google’s deal with Twitter expired in July 2011 and thus real-time search was suspended as well. However, Google will revive real-time search through Google+ later I think. Other than Google results, Twitter search results also showcase promoted tweets.

Each time Twitter users search for their interests, these tweets are shown on top of other results. User timelines reflect these promoted tweets as well, making them appear on the top of the timeline when they refresh or login. Twitter also allows geo-targeting for these tweets, which implies you can target a particular country or even a US region. That’s much on the lines of how Facebook ad campaigns work.

So how does Twitter charge for these promotions?

They are on a per-engagement basis. You only pay when someone re-tweets, replies to, clicks or favorites your Promoted Tweet.

What about audience targeting?

Facebook uses your likes and interests to serve you ads. On similar lines, Twitter uses information about what a user chooses to follow, how they interact with a Tweet, what they re-tweet etc to predict whether a promoted tweet will be interesting to you.

Promoted Trends

These are the paid trends which appear on top of the trending topics list. Twitter believes, trends can be used to drive conversations around a particular brand or product, thereby capturing a user’s attention and thus promoting the product.

Promoted trends give brands massive exposure. User interaction is no different for promoted trends. When clicked, users are redirected to view all the tweets containing the promoted trending #hashtag. Again, promoted tweets appear on the top of this list.

Promoted Accounts

The next money making strategy is through promoted accounts. Twitter gives users, sponsored suggestions for ‘Who To Follow’.

These accounts are charged on ‘Cost Per Follow’ basis. i.e. they are billed according to how many people actually take the suggestion and follow the account. As seen in the image, Twitter shows a promoted suggestion for FireFox.

Bear in mind that these recommendations are not random and are designed to be shown only to those users whose interested are aligned to those of the promoted account. If your interests and follow-lists match those of any promoted account that you currently do not follow, Twitter will recommend the advertisers promoted account to you.

Political Ads

Another rather interesting way that Twitter uses for monetization is ‘political ads’. These ads allow candidates to promote their campaign better. These ads are used to engage and reach a wider audience. Political ads can be easy recognized by the purple ‘promoted’ icon.

If you hover your mouse over the ad, Twitter displays information about who sponsored the political ads. Twitter currently offers this service only to political advertisers in the United States.

Enhanced Profiles

Enhanced profiles allow users to share their best content on their twitter pages, thereby engaging users and increasing their following. These profiles are public and are visible to even those users who are not logged in. A header image can be placed on the top of the profile page. Also, you can promote your tweets onto the top of your timeline without any extra cost.

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