Twitter is one of the most popular social networking sites in the world. People share short messages with their friends and all other registered users. Twitter is free to use by everyone, which creates the issue of financial support for the project. Since the time of its occurrence, this microblogging service has created an enormous user base. Over three hundred million people use Twitter every month. The only question is how to use this huge user base for making money. There are several ways to monetize the assets of the microblogging service. The purpose of this paper is to analyze Twitter’s business model, possible revenue model, and the most important assets, as well as the impact of churn rate on advertising revenue.
Millions of people post their news, thoughts, and impressions on Twitter every month. The microblogging service is one of the fastest means of sharing information. Twitter is free for use by everyone without any subscription fee. It is too late for the company to ask for payment for additional services. People are already accustomed to the thought that everything is provided at no cost. Therefore, the main business model for Twitter is selling data and statistics about the popularity of certain news and particular information.
The database of tweets from individual users is an enormous source of statistics. Many people comment on every event they experience. New movies receive a multitude of reviews as soon as they reach silver screens. In vary many cases people start to comment on the films while they watch them (Baek et al. 582). The film studios can analyze first-sight impressions of people and discern patterns in their reviews.
New models of smartphones and other electronics also receive millions of tweets from the moment of their occurrence on the market. As a result, the database is full of current observations and individual opinions that can be used by organizations in promoting their products and building marketing strategies. According to Levinson, businesses “use Twitter to keep in track with consumers and give them messages about deals and brands” (3).
The most effective revenue model for Twitter is non-interruptive advertising. The prospects for promoting products and services are vast. A huge audience enters the site daily. The companies and individual entrepreneurs can pay for a tweet that will be posted in the timelines of users. Other variants of advertising include promoted accounts and trends (Liu et al. 205).
The most important asset of the microblogging service is its huge database of messages. Twitter makes use of search engines that allow finding all tweets about a particular service, product, or event (Kapanipathi et al. 101). This information is crucial for all types of industries. For example, people who like sports tweet about all their purchases and every significant competition. In their messages, they can involuntarily promote certain sports brands and companies. Hutchins acknowledges “the pivotal role of social networking platforms in contemporary sports industries” (122). Twitter has several platforms that provide needed data to businesses.
Along with a large number of people using the service, Twitter has a daunting churn rate. Less than half of users visit the site two months in a row. The frequency in the use of the service is growing gradually, but only a certain part of bloggers support the activities (Myers and Leskovec 920). Nevertheless, the revenues from advertising are getting bigger independently of the churn rate because of the support from the devoted users and good implementation of promotion techniques.
Twitter’s business model is primarily based on data licensing. The microblogging service uses its huge database to search and provide information about different products and services to the big organizations and individual entrepreneurs. In the meantime, non-interruptive advertising serves as the best revenue model for the company. Twitter supports promoted messages, profiles, and trends. The most important asset of Twitter is its enormous audience and message database. The service has several companies that resell data to the purchasers. Twitter has a huge churn rate, but advertising revenues keep growing steadily.
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Hutchins, Brett. “Twitter: Follow the Money and Look Beyond Sports.” Communication & Sport, vol. 2, no. 2, 2014, pp. 122-126.
Kapanipathi, Pavan, et al. “User Interests Identification on Twitter Using a Hierarchical Knowledge Base.” European Semantic Web Conference, 2014, pp. 99-113.
Levinson, Roger. How Does Twitter Make Money: Twitter Marketing Guide. CreateSpace Independent Publishing Platform, 2014.
Liu, Yabing, et al. “The Tweets They Are a-Changin: Evolution of Twitter Users and Behavior.” ICWSM. vol. 30, 2014, pp. 5-314.
Myers, Seth A., and Jure Leskovec. “The Bursty Dynamics of the Twitter Information Network.” Proceedings of the 23rd International Conference on World Wide Web, 2014, pp. 913-924.