Twitter, a social media giant with over 540 million monthly active users, according to Elon Musk, has become an integral part of our daily lives. The platform offers a space for users to share their thoughts, connect with friends and family, follow their favorite celebrities, and stay up-to-date with news and events.
In April 2022, Elon Musk offered to buy Twitter for $44 billion, which was initially accepted by the board. However, Musk later halted the purchase in May and withdrew the offer in July due to concerns over fake and disengaged users.
A legal battle ensued, but in October, Musk eventually acquired Twitter for the initial amount offered after a deadline set by the American court.
After hearing the amount Elon Musk spent to purchase the social media giant, you must be curious about Twitter’s revenue model. A thought must have entered your mind that made you think exactly how much money the platform makes and how it earns its revenue!
Well, that’s the topic of this article! We are going to have a look at all the revenue sources of X (formerly Twitter) and check out exactly how Twitter makes money.
How Does Twitter Make Money? Twitter’s Sources of Revenue:
Over the years, Twitter has become a significant player in the social media world and has continued to expand its sources of revenue beyond just advertising, although it stays at the number one spot.
Understanding how Twitter generates revenue is important for understanding the company’s business model and potential for future growth. So, let’s get right to it!
1. Advertising Revenue
According to reports, Twitter has been experiencing a massive decline in advertising revenue in recent months. The decline has forced the company to cut costs quickly, leading to layoffs and the rush launch of a subscription service to verify users’ profiles.
This comes after Tesla CEO Elon Musk’s acquisition of the platform, which has led to rapid changes that have rattled advertisers.
Research firm Insider Intelligence slashed its forecast for Twitter’s global ad revenue this year by 37% to $2.98 billion, which is a significant decline from Twitter’s 2022 ad revenue.
Despite seeing a considerable decline in ad revenue in recent years, it is still one of the company’s top revenue sources. Twitter makes 80 to 85% of its revenue from advertising alone. Of course, the company offers different advertising options to its advertisers, including Promoted Ads, Followers Ads, and Trend Takeovers.
All this combined earns Twitter the most income, becoming the biggest source of revenue!
Twitter’s situation is not unique, as other digital ad platforms are also experiencing difficulties due to advertisers’ cutting their budgets.
For example, Snap Inc., the owner of the popular app Snapchat, said in January that tough economic conditions could lead to lower first-quarter revenue. Similarly, Alphabet Google, the world’s largest digital ad platform, posted disappointing quarterly earnings in February 2023.
2. Data Licensing
Twitter’s primary source of revenue is advertising, although it has also earned around $570 million from data licensing. The company licenses its data to various companies, including its public data stream known as the Firehose.
With approximately 500 million tweets daily, businesses can leverage this data to gain valuable insights into consumer trends and develop effective strategies for their brands and operations.
Twitter makes quite a big chunk of its revenue through data licensing by providing paid access to data it collects about its users and their preferences.
The potential for growth in this area is enormous as more and more companies realize the importance of data in understanding and reaching consumers.
3. Twitter Blue
According to several reports, Twitter Blue generated over $11 million in revenue from mobile subscriptions in the 20 markets where it was launched before its global release. However, this was during the first three months of the year. We don’t know the current revenue brought in by Twitter Blue.
The estimate does not include web-based subscriptions or annual or monthly Blue subscriptions. Sensor Tower estimates that Blue has more than 385,000 mobile subscribers worldwide on both iOS and Android, with the US being the largest market, accounting for 246,000 subscribers who spent around $8 million through their mobile devices.
But that’s not all. Twitter has also introduced colored badges: gold for verified businesses and gray for governments and multilateral accounts. This move has left users questioning the significance of these badges and how they will impact the Twitter experience.
4. Third-party Partnerships
Twitter has partnered with various companies to offer services such as live streaming of events, customer support, and analytics.
These partnerships provide revenue for Twitter through licensing fees, revenue sharing, or other agreements. This allows Twitter to expand its offerings and generate revenue from multiple sources.
As Twitter continues to evolve and expand its offerings, it will likely explore new sources of revenue. However, advertising is likely to remain the company’s primary revenue source in the near future.
Who Are Twitter’s Major Competitors?
Twitter faces stiff competition from other social media platforms, each with its unique features and audience appeal. Let’s explore some of Twitter’s major competitors.
Facebook – The Social Media Giant
Facebook is the biggest social media platform globally, with over 3 billion monthly active users. Unlike Twitter’s focus on real-time updates and news, Facebook is more focused on social connections and sharing personal information.
Users can create profiles, connect with friends and family, join groups, and share photos and videos. Facebook also offers a marketplace for buying and selling goods and services, making it a one-stop shop for social interactions and e-commerce.
Instagram – Visual Content King
Instagram is a photo and video-sharing app owned by Facebook. It boasts over 2.5 billion active users and is popular for its visual content and influencer culture.
Instagram allows users to share photos and videos, add filters and captions, and engage with others through likes, comments, and direct messages.
The platform’s algorithm prioritizes high-quality content, making it an ideal platform for creatives, businesses, and celebrities to showcase their work and connect with their audience.
Snapchat – Disappearing Messages and Filters
Snapchat is a messaging app that allows users to send disappearing messages, photos, and videos. It is popular among younger users and is known for its filters and lenses that add special effects to pictures and videos.
Snapchat also offers a range of features, including a news section, gaming, and augmented reality experiences. While its focus on ephemeral content sets it apart from other social media platforms, Snapchat faces tough competition from Instagram, which has implemented similar features.
TikTok – Short-Form Video App
TikTok is a short-form video app that allows users to create and share 90-second videos. With over 1 billion monthly active users, TikTok has grown rapidly in popularity and has become a cultural phenomenon.
The app’s algorithm recommends videos based on user interests, making it easy for users to discover new content. TikTok’s features include filters, effects, and a duet function that allows users to create videos with friends.
Twitter competes in a crowded social media space, where each platform offers unique features and audience appeal.
Controversies Faced by Twitter
Twitter has been going through many changes lately, some of which have caused problems and controversies. Elon Musk became the CEO of the company, and this caused a lot of issues within Twitter’s own organization. Many employees resigned, which left essential areas without staff.
Another controversial move was the banning of accounts belonging to journalists from reputable publications like Wired, The New York Times, and the Washington Post, who expressed opinions that differed from Musk’s ideas. This move was criticized by European public bodies for violating press freedom, as exemplified by Vera Jourova’s tweet, the Vice President of Values and Transparency at the European Commission.
Despite Musk justifying these actions as an effort to improve Twitter’s performance and expand its user base, they have led to confusion and a surge in extremist opinions on the platform.
Elon Musk even opened a poll on Twitter asking whether he should step down as CEO, promising to abide by the results. The poll result showed that most people voted “yes,” but Musk hasn’t stepped down, citing the lack of a proper successor who would be “foolish enough” to take the job.
In addition to its revenue challenges, Twitter has also faced internal challenges such as high employee turnover and a lack of consistent policies.
As a result, Twitter has been in a state of flux, introducing new policies only to sunset them shortly after that. This has led to confusion and a lack of trust among both advertisers and users.
Furthermore, the controversial image of Twitter’s new owner, Elon Musk, has also contributed to declining investor confidence.
Conclusion
Twitter’s recent controversies have left many marketing professionals uncertain about the platform’s future. The flexibility of Twitter’s rules has created an environment prone to spreading fake news and hate speech, posing a risk for brands seeking a secure and stable online presence.
As we continue to monitor the developments, it’s essential to evaluate whether a presence on Twitter is worth the potential risks. After all, no company wants to be associated with an environment that promotes extremist content and misinformation.
In this ever-changing landscape, brands must remain adaptable and prepared for the unexpected. Only time will tell if Twitter can regain stability and become a secure environment for users and brands alike.
So, that was the complete article on how Twitter makes money. As the decline in its revenue figure continues, it will be exciting to see whether the social media giant can regain its footing and bring up its revenue in the coming years!
