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Business Operations Business Models

How Does Twitter Make Money (Business and Revenue Model)

The Twitter business model

How Does Twitter Make Money?
Here’s what you should know:
  • What is Twitter, and how does Twitter work?
  • How does Twitter make money?
  • Advertising
  • Data Licensing
  • Twitter Blue (Subscription Service)
  • Twitter’s Subsidiaries, Acquisitions, and Exits
  • Twitter’s profit and revenue
  • What is the Twitter business and revenue model?
  • Twitter’s funding and valuation

How does Twitter make money if it’s free? Here is a full, in-depth, breakdown of their three (3) revenue streams and the different products and services they offer, as well as the Twitter business model, their year-over-year revenue, and how Twitter works.

What is Twitter, and how does Twitter work?

Twitter is a social networking platform that allows users to post status updates called “tweets” and stay up to date with each other.

How Twitter works is: Once a user creates a Twitter account using an email or phone number, they can then tweet, retweet, quote tweet, comment, like, and followers other users on the platform.

Founded in 2006 by Jack DorseyNoah GlassBiz Stone, and Evan Williams, Twitter now has more than 199 million daily active users on their platform worldwide with a $54.42 billion market cap as of July 2021.

Some of Twitter’s competitors include Facebook, Instagram, Pinterest, Snapchat, and other social networking apps.

Twitter App in Apple App Store | Twitter Business Model | How Does Twitter Make Money?
Source: Apple App Store

How does Twitter make money?

Twitter has more than 199 million Monetizable Daily Active Users (mDAU) on its platform worldwide. So how does Twitter make money off of all those users?

Below is a breakdown of how much money Twitter makes and its revenue model. Including their main revenue stream and how much they charge for their services.

Here are the 3 ways of how Twitter makes money (in 2021):

Twitter has a revenue model that makes money in three (3) ways – advertising, data licensing, and Twitter Blue.

#1. Advertising

Twitter makes money from selling advertising placements to marketers. In fact, $3.21 billion or 86.3% of Twitter’s total revenue of $3.72 billion came from advertising in 2020.

The way advertising on Twitter works is: From a user’s Twitter account, they can create an ad campaign to fill out the campaign’s objective, daily budget, and what they’re looking to promote. Twitter gives advertisers the option to promote tweets, videos, and Twitter accounts.

Advertising Business Model
Source: Twitter

Note: 86.3% of Twitter’s total revenue came from advertising in 2020.

#2. Data Licensing

Twitter also makes money through licensing its data by, as described by Twitter on page 43 of Twitter’s 2020 Form-10K, “offering data products and data licenses that allow our data partners to access, search and analyze historical and real-time data on our platform, and providing mobile advertising exchange services through our MoPub exchange.”

Data licensing and other revenue totaled $509 million for Twitter in 2020.

#3. Twitter Blue (Subscription Service)

On June 3rd, 2021, Twitter rolled out its first-ever subscription service – Twitter Blue. It’s currently being rolled out and tested in Australia and Canada.

Some of the features and perks for Twitter Blue subscribers include bookmark folders, undo tweets, reader mode, and customizable app icons for their device’s home screen. Subscribers will also have access to dedicated customer support.

Twitter Blue Cost:

  • $2.99 per month
Twitter Blue | How Does Twitter Make Money?
Source: Twitter

Note: Because Twitter Blue is so new, revenue is still unknown at this time.

Twitter’s Subsidiaries, Acquisitions, and Exits

To date, Twitter Inc. has made a total of 63 acquisitions. On top of that, Twitter also had 8 investments, 1 lead investment, and 2 successful exits.

Twitter Acquisitions
Source: Crunchbase

Twitter’s profit and revenue

In 2020, Twitter reported $3.72 billion in revenue.

Note: Because Twitter, Inc. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Twitter’s publicly released financial reports, including annual reports, through  Twitter’s investor section on their website.

What is the Twitter business and revenue model?

Twitter makes money through a few revenue models that they combine within their company, they are:

  • Advertising based business model
  • Licensing business model
  • Software as a service (SaaS) business model
  • Mergers & acquisitions (M&A) business model

Twitter’s funding and market cap

According to Twitter’s Crunchbase profile, Twitter raised $1.5 billion over 18 rounds with a $54.42 billion market cap as of July 2021.