A:

Twitter (TWTR) is a social media company that provides a network connecting users to people, information, ideas, opinions, and news. The company's services include live commentary, live connections and live conversations through mobile devices and the Internet. The company can also be used as a marketing tool for businesses.

Twitter's Business

Twitter earns 86 percent or more of its revenue from advertising. In the fiscal year 2017, Twitter posted an advertising revenue of $2.1 billion, which was a six percent decrease of what the social media site brought in during the same time in 2016. For Q1 of 2018, advertising revenue was reportedly $575 million, boasting a 21% increase year-over-year. On June 7, 2018, S&P Dow Jones Indices announced that Twitter will replace Monsanto Company (MON) in the S&P 500's top U.S. index of public companies, effectively retiring the Monsanto brand name.

Twitter uses promoted tweets, promoted accounts and promoted trends. Twitter also 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, 2017 data licensing and other revenue increased 18 percent, resulting in a 3.4% percent 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. Television shows and digital media brands are heavily invested in Twitter data, often promoting live tweeting as a means to gauge interest and response during event coverage or a broadcast.

RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. How does Facebook make money?

    Facebook has gone from losses to a money spinner in a short span of time. Where do its profits come from? Read Answer >>
  4. What is the formula for calculating working capital in Excel?

    Find out more about working capital, what working capital measures and how to calculate a company's working capital using ... 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. Can I make money advertising on my car, or is it a scam?

    Are car wrap advertising companies legitimate? Some companies are scams, but some car wrap companies offer legitimate ways ... Read Answer >>
Related Articles
  1. 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?
  2. Investing

    Twitter Stock: An Earnings Case Study (TWTR)

    Note how Twitter’s own messaging platform played a role in causing its April 2015 earnings disappointment, bringing sustained bearishness for this stock.
  3. 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.
  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. Investing

    Facebook Takes the Knife to Twitter Over Ad Sales

    Analysts are predicting Twitter's stock price to halve as Facebook's popularity for advertisers grows.
  6. Insights

    Is Twitter Doomed? (TWTR)

    Twitter has been reporting disappointing earnings for some quarters now. Is the stock doomed?
  7. Investing

    Analysts: Twitter Should Shift Its User Focus

    Some analysts want Twitter to concentrate more on daily active users than monthly active users.
  8. Investing

    Twitter Stock Is Beating S&P 500 Index in 2017

    While it's only a week into the new year, the embattled social media giant should toast this small victory.
  9. Investing

    Twitter's Board to Meet to Discuss Possible Sale (TWTR, MSFT)

    The social media giant's fate has piqued the interest of even some of Twitter's biggest doubters.
  10. Investing

    2 Twitter Execs Leave, Giving Up $35M in Stocks

    In other news, an SEC filing says that some shareholders want Twitter to become a cooperative.
RELATED TERMS
  1. Promotion

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

    A promoter is an individual or company that, for a fee, helps ...
  3. Tailored Advertising

    Tailored advertising places an emphasis on the needs and wants ...
  4. Media Buy

    Media buy is the purchase of advertising from a media company ...
  5. Advertising Checking Bureau - ACB

    The Advertising Checking Bureau (ACB) serves manufacturers and ...
  6. Mobile Advertising

    Mobile advertising is type of advertising that appears on mobile ...
Trading Center