At first glance, many people often wonder how social media platforms like X, formerly Twitter, generate their revenue. This could be surprising since the company maintains its resources and staff while remaining open. While this may be unclear, the company makes billions of dollars yearly. It brought in $4.4 billion in 2022 alone. So, how does Twitter make money?
X generates most revenue from advertising, where people pay to promote their services, products, or brands through posts. The company also makes money from selling X premium subscriptions, which it only recently introduced. Data licensing is another major area where the company generates income; this accounts for a major chunk of the pie. So, this article discusses Twitter’s sources of making money.
How Does Twitter Make Money? 3 Major Ways the Company Generates Revenue
Since its inception, Twitter has continued to grow in its operations and numerical strength. The company has amassed over 528 million monthly active users. By 2021, reports indicated the platform had over 7,500 active employees on its payroll. Besides that, the platform also spends a lot on maintaining its resources. Because of this, people often ask questions about the platform’s source of income.
The Company Makes Money From Advertising
X or Twitter makes most of its income from advertising revenues. The San Francisco-based company made a huge chunk of its multi-billion dollar revenue from advertising in 2022. This segment accounted for over 85% of the company’s total income that year. The company generated revenue this way by offering several advertising options to its customers.
The options include promoted ads, trend takeover ads, Twitter amplify, and follower ads. Promoted ads involved boosting content that appeared like regular posts on the platform to reach a wider audience, including non-followers. This is one of the most popular advertising options on the platform. Although it initially included a “Promoted” tag, the company has switched it to an “Ads” tag. The company charged between $0.25 to $2 per action on this option.
The social media platform also has an Amplify feature, a video advertising product for consumer brands and media companies. This feature allows these companies to pair their ads with relevant premium content from publishers to increase conversions. The company also offers follower ads, which allow people to promote their profiles to grow their audiences. In this case, Twitter charges $1.01 to $2 for one follower an advertiser receives.
For trend takeovers, the company allows advertisers to place their ads directly on the trending section of the app. While reports showed that it charged considerably higher for this type of ads, there is a standard fee as opposed to promoted ads. Usually, the platform charges about $200,000 per day for a single-trend takeover ad.
Twitter or X Generates Revenue From Data Licensing
After advertising, data licensing is one of the company’s biggest revenue streams. Reports show this activity accounts for about 11% of the platform’s revenue. Although it brought in over half a billion dollars in 2021 alone, X’s data licensing activities have expanded by almost 12% yearly. Although the exact numbers do not follow any identifiable trends, this segment still played its role in the company’s growth.
Data licensing involves selling subscriptions and public data access to other companies and third-party developers. In turn, this data offers historical and current information and insights about trends on the platform. With these, these third-party developers and companies also build tools and plug them into X or Twitter, supporting specific actions.
Companies also find this data useful since it helps them learn about their customers and understand helpful patterns. Due to the massive volume of these posts, these companies employ sophisticated tools to analyze the data, helping to draw useful conclusions afterward.
The social media company initially provided a free access tier to its data that supported limited actions. Then, it charged from $149 to $2,499 monthly for the higher tiers that offered more access. However, since the company switched hands, the new owner, Elon Musk, has implemented several updates that have affected this feature.
For instance, Elon Musk’s updates include creating data licensing packages requiring monthly subscription fees. These packages begin from the $42,000 option that gives access to 50 million posts to the $210,000 option offering access to 200 million posts.
X Now Makes Money From the Sale of Premium Subscriptions
After Elon Musk’s takeover of the company, the Twitter Blue feature was one of the first things it introduced. This feature involved the sale of checkmarks instead of the past processes that characterized verification on the platform. Besides the blue checkmark, Twitter or X also introduced gold checkmarks for registered businesses and grey ones for government officials.
This feature has become one of the platform’s important revenue-generating methods. Well, the social media company offers three tiers for its subscription package. First, it offers the basic package with other perks but without the blue checkmark for $3.00 monthly. It also offers the Premium plan, which costs $8.00 per month, while the Premium+ costs $16.00.
After the platform rolled out this feature, experts estimated it’d make about $28 yearly from the initial subscriptions. Reports indicated that the platform had made $11 million after three months from the mobile subscriptions alone. But besides the regular blue checkmark, the platform introduced gold and gray checkmarks for which it charges higher.
These check marks, representing verified organizations, cost $1,000 per month. Of course, all these have gathered substantial users since their introduction. Coupled with the extra $50 affiliate badge that accompanies these verified organizations, this feature is bound to generate massive revenue. This is one important option around how Twitter makes money.
How Much Money Does Twitter Make? Discover the Exact Figures
Twitter’s overall revenue varies monthly and yearly. But this exact figure depends on several factors that affect how much activity occurs on the social media app. Although people consider the social media app a powerful platform, external factors greatly affect it. Of course, since it makes most of its income from advertising, a shift in the general balance also impacts it. Due to all these, people often wonder how much comes into the company. So, how much money does Twitter make?
According to Investopedia, Twitter made $4.4 billion in 2022 alone. While 90% of this total revenue came from advertising, there was an overall drop in income generation. The company had made over $5 billion the previous year, 2021, which saw better figures than 2020. Although it reported a positive income in 2020, it only pulled in $3.72 billion. The difference in revenue between 2020 and the subsequent only indicated the rise in global advertising spending.
Unsurprisingly, many financial analysts expect the company’s revenue to plummet drastically in 2023 due to its loss of advertising. Reports indicate that X, aka Twitter, has lost over half of its advertising revenue since its takeover in October 2022. This resulted from the company’s global advertisers exiting the platform amid the changes that have strongly characterized the app.
Following the company’s rebranding from Twitter to X, many advertisers have continued to limit their spending on the app. The platform’s owner reported that it had not received an increase in revenue yet, citing the company’s massive debt. But despite this financial situation, the company is actively implementing changes that would increase inward cash flow. Introducing Twitter Blue or X Premium subscriptions is just one way to boost the company’s revenue.
How Much Net Profit Does Twitter Make? Is the Company Profitable?
Despite the huge revenue volumes Twitter or X generates, questions exist about the company’s net profit. This is one of the popular topics among financial analysts. This is because of the company’s unstable revenue, especially for advertising, and its large expenditures to keep running. So, what is this company’s net profit over time?
Twitter last reported a positive net profit in the first quarter of 2022; this figure stood at $513 million. The company’s net revenue plummeted dramatically in the last recorded quarter, losing $270 million. This loss followed a gross revenue of only $1.18 billion during that quarter.
These reports show the company’s inconsistency in maintaining a smooth income curve. Twitter, or X, recorded its last significant net revenue in 2020, making $1.4 billion in net income. It has remained downward since then, reporting major losses during the Covid-19 pandemic.
A tumultuous financial situation has characterized Musk’s tenure as company owner. His policies do not align with those who like to pull the strings. For instance, recent accusations about racism and anti-semitism saw many organizations mount pressure on the company’s advertisers.
These continued occurrences have pushed the company’s finances downward. Experts have projected that X, formerly Twitter, was on track to make $3 billion in 2023. This represents a major drop from 2022’s figures.
How Do Users Make Money From Twitter?
Initially, Twitter users made money on the platform from sponsored posts, affiliate marketing, and influencing. People could also make money from the “Super Follows” feature, sponsored posts networks, and the sale of related products. However, these methods mostly worked for celebrities, popular individuals, and people with large audiences on the platform.
Since its takeover and rebranding, the company has implemented several new features that allow more users to make a living. For one, the company’s ads revenue sharing program has helped users make money directly off the platform. Through this program, the social media company distributes a share of the monthly revenue from advertising to eligible users. Only users with premium subscriptions, at least 500 followers, and five million impressions from the last three months qualify.
The company has also introduced a subscription feature that allows people to charge small fees for exclusive content. In the same way, only active users with a minimum of 500 followers and a premium subscription qualify for it. Besides merely qualifying for these monetization features, the company also requires that users stick to its policies to enjoy them. While you may ask, “How does Twitter make money,” it is sometimes necessary to erase potentially problematic posts.
This is why TweetEraser has designed a simple web application for filtering and deleting posts from X, sometimes in bulk. This application allows users to upload their archives before performing specialized deletion tasks. Since it does not spam users with promotional content, it is ideal for use. Try out our X timeline declutter tool today!