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How does Twitter make money? By what methods? Twitter began as a simple micro-blogging site where users were limited to 140 characters only. Since then, though, has evolved into one of the most popular social networking platforms around.
The business is already valued at more than $20 million, but because it's free to use and for people to subscribe and join the service, many wonder how Twitter makes money from its users. Advertisers, of course, are happy with the social networking website's ability to attract massive amounts of prospective customers. That's why they continue to pay to advertise on the site. But how does twitter make money through adverts? A new method that has come about is through banner advertising.
Social networking platforms such as Facebook, LinkedIn, MySpace and even YouTube have large active user bases. Their revenue model is through sponsored links which can be done on the user profiles or pages. When a user clicks on these links, the platform's company advertisers take over and the user will see ads on his or her profile or channel pages. This is the same method used by traditional websites like Google, Yahoo and Bing - the latter of which also allow for sponsored searches - although Twitter's business model differs somewhat when compared to the others.
Twitter's revenue model is relatively different compared to its competitors since it doesn't charge any fees for users. Instead, it relies on users' engagement and their reaction to company ads. For this reason, it isn't uncommon for a company's ads to be featured just after a tweet is sent. For example, ads were recently displayed on the right hand side of Jack Dorsey's Twitter stream after he shared a blog post on Buzzfeed. This shows how important an element Twitter's active users play in its business model.
In order to understand how does twitter make money through advertising services, one must look at how it operates. The microblogging site has a number of prominent users such as celebrities, businesspeople and politicians. These users are regularly updated with new applications, services and even news stories. Their interaction spreads the word about a company across a wide area. Their data is updated constantly and hence this accounts for the wide reach of tweets. Therefore, a company's product information and advertisements are spread across a huge area.
Twitter revenue can either come from direct payments or through advertising revenue through its active users. The latter is the most important source of earnings since the amount advertisers pay per click, post and response is relatively lower than with other social networks like Facebook. However, the cost is high. To get high-value traffic and to keep it coming back, companies need to invest in data licensing revenue. This is where a company makes its investment return through the active users it has on the platform. In other words, Twitter may not make money directly through advertising revenue but it can make money indirectly through the use of its users.
In other words, Twitter may not directly make money by being used by businesses to market their products, but it can indirectly make money through its users. Companies can use Twitter's unique ability to generate revenue from each user who sees their advertisement. The users can in turn reply to the advertisement or they can simply save it for future reference. This allows businesses to make money from the responses made to advertisements posted on Twitter. The cost of running an ad campaign through Twitter may seem high but the results are numerous since the target audience is large and targeted.
The key to the success of Twitter is its ability to generate interest in its site through its user community. This gives businesses a chance to reach out to a much larger audience. Businesses can monetize their audience through data licensing on Twitter and through the active engagement of its users. The best strategy to make money with Twitter is to work with third-party companies that will help maximize the use of Twitter's unique capabilities.
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