Twitter is going public soon, so it’s worth knowing how the micro-blogging site makes money.
It is an advertising-based business. Twitter also sells data. It will generate about $US583 million this year. Twitter is expected to generate a little less than $US1 billion in 2014, according to eMarketer.
Most of Twitter’s revenue comes from three types of ads, although it plans to have a more robust advertising offering next year.
The New York Times’ Vindu Goel gives a good rundown of those three money-making ad products:
- Promoted tweets: Advertisers pay to have brief messages show up in users’ stream of Twitter messages. They can use keyword targeting to reach specific users. Advertisers can also use a little bit of demographic targeting, although Twitter doesn’t know as much about its users as Facebook does. Twitter gets paid when users engage with the promoted tweets (when they favourite, comment on, or retweet the ad).
- Promoted trends: Twitter lists which topics are being talked about most on its platform. The trends vary by location, so Twitter’s list of topics in the US might not be the same as the list in England, for example. Advertisers can pay to have a topic of their choice listed too. A promoted trend costs roughly $US200,000 for a day of exposure on all US Twitter accounts, the New York Times reports.
- Promoted accounts: If a brand wants more Twitter followers, it can pay to have its account recommended to Twitter users.
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