How Twitter makes its money

About half of the revenue Twitter earns from advertising comes from video, Twitter’s head of global resellers Barry Collins told MyBroadband.

Collins said the vast majority of Twitter’s revenue, around 90%, comes from advertising. Its data business makes up the remaining 10%.

Asked how the scandal surrounding Facebook and Cambridge Analytica affected its data business, Collins said Twitter is a very different platform compared to its competitors.

“Most of the data we sell is public already,” he said, adding that the company’s data business essentially provides information for brand sentiment analysis to a company which specialises in the field.

Collins added that he is not aware of any initiatives at Twitter to look into alternative revenue streams, or the use of cryptocurrencies to monetise the platform.

“[Advertising] is the very core of how we monetise the platform,” he said.

With video making up half of the advertising revue, Collins said they are steadily developing their offering.

Twitter currently has deals with publishers for pre-roll advertisements in video streams, and Collins said they work carefully to ensure the brand safety of the content and ads.

“Brand safety is critical,” he said.

Becoming profitable

Collins’ statements follow Twitter posting its first-ever profit in the fourth quarter of 2017. The company was also profitable in Q1 2018, earning $61 million.

Twitter achieved this profitability thanks to the cutting of costs, reported Recode.

It cut costs in three major areas:

  1. Twitter spent 26% less on stock-based compensation in Q4 2017, amounting to just over $102 million.
  2. It decreased research and development spend by 34% to $134 million.
  3. Sales and marketing expenditure was cut by 30% to under $164 million

Recode also noted that while Q1 revenue was up 21% year-on-year, it only represented a 12% increase compared to the revenue it earned two years ago.

Facebook’s revenue, by comparison, saw an increase of 122% over the same two-year period.

Twitter said its recent year-on-year increase in ad revenues was thanks to growth in video advertising, and better value for advertisers.

“Revenue growth was driven by continued strong ad engagement growth, improved revenue features, improved return on investment, and better sales execution,” said Twitter.

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How Twitter makes its money