A:

Twitter (TWTR) earns 85% or more of its revenue from advertising. In the second quarter of 2017, Twitter posted an advertising base of $489 million, which was an 8% decrease of advertising revenue the social media site brought in during the same time in 2016. Twitter uses promoted tweets, promoted accounts and promoted trends. Twitter sells promoted tweets to marketers, and these then appear in users' Twitter feeds. The company creates tailored advertising opportunities by using an algorithm to make sure promoted tweets make it into the right users' timelines. Promoted accounts are those paid for by an advertiser that Twitter places in targeted users' "Who to Follow" list.

Twitter makes additional money through data licensing. Though advertising revenue decreased year-over-year, data licensing- and other revenue increased 26%, resulting in a 5% decrease in total revenue. Twitter has named four companies "official data resellers," and these companies have direct access to all tweets. Each company has developed algorithms for data mining that measure consumer response to everything from brands to movies. Keenly invested in Twitter data are television shows that often promote live tweeting as a means to gauge interest and response during broadcasts.

RELATED FAQS
  1. What are the key differences between marketing and advertising?

    Understanding the role advertising plays in the marketing mix will help business owners define their promotional strategies ... Read Answer >>
  2. How important is advertising revenue in the Internet sector?

    Learn about the importance of advertising revenue in the Internet industry. Find out how much Internet firms rely on advertising ... Read Answer >>
  3. How do Internet companies profit if they give away their services for free?

    Learn how companies in the Internet sector make a profit when service, content and user applications are offered at no cost ... Read Answer >>
  4. How does revenue sharing work in practice?

    Take a look at some of the several different iterations of revenue sharing, the practice of distributing operating profits ... Read Answer >>
  5. How rapidly can expanding sales reduce a firm's earnings?

    In order to operate and make money, a company must spend money. Revenue - the dollar amount of sales - can be seen on a company's ... Read Answer >>
  6. Why is social responsibility important in marketing?

    Drive consumers toward products and services by prioritizing social responsibility in marketing to enhance the company's ... Read Answer >>
Related Articles
  1. Investing

    5 Ways to Make Money on Twitter (TWTR)

    Find out how people are making money online on Twitter, and get some ideas that can turn Twitter into a source of revenue for you or for your small business.
  2. Insights

    Twitter's Wild 2016: A Year in Review

    The term "colossal failure" seems an appropriate description of Twitter's 2016 campaign.
  3. Investing

    Twitter: A Company in Search of a Turnaround Story (TWTR)

    Will Twitter's most recent earnings report bring good news to the company's investors?
  4. Investing

    Twitter Stock Falls on Weak Fourth Quarter Revenue

    The embattled social media giant delivered its worst revenue growth performance in the company's history.
  5. Small Business

    How Twitter And Facebook's Business Models Compare

    Twitter and Facebook have both had a meteoric rise, but the firms have used different strategies to achieve success.
  6. Investing

    Twitter Slammed for Deleting Tweets on United

    Twitter is facing criticism for allegedly blocking tweets that mocked the embattled airline.
  7. Trading

    Twitter and Stock Trading: A Real Strategy?

    Is it really a profitable strategy to look at the number of tweets about a stock as an indicator to help you decide to buy/sell a stock?
  8. Investing

    Twitter's Future: A Closer Look (TWTR)

    Twitter's underlying fundamentals show why the company will struggle to attract new users and monetize its product.
  9. Investing

    Twitter Considers Paid Subscription Service

    The troubled social media network is considering adding a paid membership option for business users in a bid to boost stagnant revenues.
  10. Investing

    Twitter Co-Founder Returns to the Social Network

    Co-founder Biz Stone disclosed in a blog post he's returning to the social media company.
RELATED TERMS
  1. Promotion

    A promotion can refer to the advancement of an employee's position, ...
  2. Promoter

    An individual or company that, for a fee, helps raise money for ...
  3. Advertising Federation Of America - AFA

    A regional advertising group based on the U.S. East Coast that ...
  4. Flighting

    An advertising scheduling strategy in which a business alternates ...
  5. Advertising Elasticity Of Demand - AED

    A measure of a market's sensitivity to increases or decreases ...
  6. Comparative Advertising

    A marketing strategy in which a company shows how its product ...
Trading Center