How does Twitter Make Money

How does Twitter Make Money – Unicorn Economy Analysis

How does Twitter Make Money
How does Twitter Make Money

About Twitter, Founders, Funders and Facts

I know, Twitter is a Laughing Stock.

I mean literally.

This is a Strategy Team Joke in many startups – Twitter is Listed [Stock] and it’s performance is seriously laughable.

The reason is that these guys siphoned lot of Investor Money to make a money gobbling machine that went from $18 Billion USD [pre IPO valuation] to $50 Billion USD [highest point of market cap] and now trading at a sympathy worthy market capitalization of $15 Billion USD [Below their last Private Equity Funding Valuation].

The only people who made money in this deal were investors, founders and none.  The people who purchased stock from public market are repenting now.

Twitter Founders: Twitter is co-founded by Jack Dorsey, Evan Williams, Biz Stone, and Noah Glass [Williams fired Glass 5 years later] and started in July of 2006.  As of March of 2016, Twitter has more than 310 million monthly active users.

Twitter Funders: Total funding pre-ipo was upto $1.18 Billion

How does Twitter Make Money

Before we get a look at how does twitter make money, we should first know about the various companies it holds (has bought over).   The list is stands a tall 48 names as follows:

  1. Absorbed : Magic Pony Technology $150M : AI Based Video compression technology (to compete with YouTube Business Model) – Now valued at $13M
  2. Absorbed : Peer : Feedback loop tech [integrates to anonymous twitter feeds, now dropped]
  3. Absorbed : ZeroPush : A Push notification technology for Apple Devices [As if twitter could not build this on their own] – now a part of twitter app push feed.
  4. Open Source : Fastlane : App Stock code management tech for updates and push downloads
  5. Absorbed : Whetlab : AI Implimentation company (team acquired)
  6. Absorbed : TellApart $479M in Cash & Stock : Data Analytics for Retailers – Now a part of Twitter Analytics
  7. Absorbed : tenXer $50M  : Progress monitoring tool – Now a part of Twitter Trends
  8. Makes AD Money : Periscope Co : Periscope was Twitter’s biggest Failure, days after periscope launch, Meerkat (some one in the same space) killed it globally with sky high valuation being given to MeerKat (this also failed in next 3 months) – This is a live streaming tech which people can use to tweet live videos of themselves (similar to SnapChat Stories).
  9. Absorbed : Niche $50M in Cash & Stock : Social Media Influencer’s can make money from their following and by creating stuff.
  10. Makes REVENUE Money : Zipdial $30M : Indian Company founded by Americans in India.  Missed Call Marketing and Response collection tech.
  11. Absorbed : Gnip $134M in Cash & Stock : Data Analytics for Businesses – Now a part of Twitter Analytics
  12. Absorbed : Mitro : Password storage Browser Extension [duh!]
  13. Open Source : CardSpring : API Service for Developers
  14. Absorbed : TapCommerce $100M : Tech for refollow marketing, follows the app installer based on its activity on the device, beyond install marketing
  15. Makes AD Money : SnappyTV : Mix of NetFlix, YouTube and PeriScope [All for its Video Platform Vine]
  16. Makes REVENUE Money : Namo Media $50M : Mobile Advertising Tech Co.
  17. Absorbed : Cover Lockscreen : Android App to Reach apps from lockscreen [to promote Twitter]
  18. Open Source : Adrenaline Mobility : Backend Security Tech for Apps
  19. Absorbed : SecondSync : Data Analytics for Videos
  20. Absorbed : Mesagraph : User Follow Tech, to show relevant ads and news feed items
  21. Makes REVENUE Money : MoPub $350M in Stock : Mobile Advertising Tech Co.
  22. Absorbed : Trendrr : Progress monitoring tool – Now a part of Twitter Trends
  23. Absorbed : Marakana : MooC App : Now a part of Vine Tech
  24. Absorbed : Spindle : Progress monitoring tool – Now a part of Twitter Trends
  25. Absorbed : Lucky Sort : Big Data Analytics for Videos / Streams / Text
  26. Absorbed : Ubalo :  AWS Competitor for Managing Twitter’s own Servers
  27. Absorbed : Bluefin Labs $80M : Data Analytics for Videos
  28. Absorbed : Crashlytics $100M : Data Analytics for Crash Reports of Apps
  29. Absorbed : Cabana : DIY App Development – Browser Based
  30. Makes AD Money : Vine $30M in Cash : Video Platform like YouTube
  31. Open Source : Clutch.io : API for Developers
  32. Absorbed : Hotspots.io : Social Media / PR data analytics, listening tool
  33. Absorbed :Posterous : Blogging Platform like WordPress / Blogger
  34. Absorbed :Dasient : Internet Security Company
  35. Absorbed : Summify : Summarizing Feed Tool
  36. Open Source : Whisper Systems : Internet Security for Developers
  37. Absorbed as the inHouse SEO Team : Julpan Unknown : SEO Tool for Tweets [now you know why tweets zoom to the top of google search results]
  38. Absorbed : Bagcheck : Social Sharing and Discovery tool
  39. Absorbed : JUGS : Social Media / PR data analytics, listening tool
  40. Absorbed : AdGrok $10M (terms undisclosed) : Google Adword Like tool to find out interesting trends from patterns
  41. Makes Money : TweetDeck $40M in Cash & Stock  : Social Media / PR data analytics, listening tool
  42. Open Source : Fluther : Quora Competitor
  43. Absorbed : Dabble DB : Database Management System for Developers [MySQL]
  44. Absorbed in the SMS Update Team : Cloudhopper : Mobile Messaging Tech
  45. Absorbed : Atebits : Game Tech
  46. Absorbed : Mixer Labs $5.2M : Location Engine for Developers via API
  47. Absorbed : Values of n : AI Assistant
  48. Absorbed : Summize $15M in Cash & Stock : Chat Bot Tech

More over Twitter is a significant contributor [by owning] for Tech community by way of BootStrap [a responsive web front-end framework].

How does Twitter Make Money

In the above synopsis of how does twitter make money, following is the key to be used:

  1. Absorbed : Has been absorbed in the internal team and the product has been discontinued for the general public.  Twitter makes money from these by using them internal support systems.
  2. Open Source : Product still on for general public and the team hired by Twitter.  twitter does not make money from any of these companies, this is just giving back to the society.
  3. Makes Money : These types of products are either freemium, making revenue or making money via advertising and ultimately add up to the top line for twitter.  Twitter makes money from these either by way of subscription or by way of eye balls.

These business contribute less than 15% of the total revenue for Twitter, so I will not be discussing any of these services’ revenue model and how do these businesses make money.

How does Twitter Make Money

How Twitter Makes Money
How Twitter Makes Money

The primary business model of twitter and how twitter makes money is by lending twitter users’ eye balls in exchange for money

and

SELLING DATA (yes you got that right)!

LinkedIn did this same thing, when they sold themselves to MicroSoft.  Read more for knowing How does LinkedIn make money by selling data of Professionals to MicroSoft, if that is what that deal was.

Twitter is the fastest news based social networks, because morons using twitter, tweet while shitting as well as while getting killed to a bomb strike etc. etc.

Because of it’s speed and easy discovery it becomes place of choice for advertisers to promote themselves there.

You May Be Also Interested in Reading : How Does FaceBook Make Money

How Twitter Makes Money

How Twitter Makes money from following revenue lines will be explained by examples:

  1. How does Twitter Make Money from Advertising?
    • Twitter makes 85% of its total revenue from advertising
    • About 400$ Million was its total advertising revenue as of 2015
    • Twitter has options of promoted tweets (direct from advertisers into the news feed of twitter users, this is primarily done to get more eyeballs to the ad campaign of the marketer) – The company ensures promoted tweets make it to the users’ timelines irrespective of whether or not that user is following the marketer.
    • Promoted accounts (to gain more followers for important twitter users and accounts by way of promoted accounts and who to follow) and promoted trends (so now you know the trending sh*t that you see is maybe not trending organically).  Promoted trends are trends that a user can click and that trend search result list includes a promoted tweet as the first result position.
  2. How does Twitter Make Money by Selling Data?
    • Twitter also makes money through selling data and calls it data licensing. Twitter’s data licensing revenue is $32.2 million as of 2015. Twitter has four “official data resellers,” and these companies have direct access to all tweets (deleted and otherwise) and its individual twitter users personal data.
    • This is like a SaaS company into data mining selling it as an API based access to understand viewers choice and preferences.  Resellers have developed algorithms for data mining that measure consumer response to everything from brands to movies. Major buyers of these data enabled services are television shows and on tv movies that often promote live tweeting as a means to gauge interest and response during broadcasts so that they can sell air time to potential advertisers!

You May Be Also Interested in Reading : How Does SnapChat Make Money

Twitter Business Model

Twitter Business Model
Twitter Business Model

Twitter Business Model is exactly similar to that of other Social Networks which see user eye time to advertisers and marketers.

Primarily Social Networks are valued on a per user basis at the time of valuation or listing on public markets.  Twitter is the worst performer on the same metric.  Read this here to have a better perspective on the same.  Instagram and WhatsApp have raced ahead of Twitter in terms of User based Value because of a better engagement.  I have an opinion on Twitter going bust very soon or being taken over by some one as large as MicroSoft.  I guess they did not pay attention to their business model analysis before being listed at a mammoth valuation.

How does Twitter Make Money Disclaimer : Please use caution while using information, all views of the author of Unicorn Economy.