MONEY SPINNER: The social network is motivated entirely by profit. The number of shares you get on Facebook and Twitter depend not only on your popularity but on how much you are willing to pay. Every Facebook post made by you has a boost option which you can use to increase the number of people who will read the post. All political parties have large social media cells to market the ideology of their party and its leaders.
By Nathan Relief
Twitter is not an organisation planned to provide you a platform for expressing your views. All social media platforms including Facebook are huge money making machines. Not only do they get direct income through advertising but also benefit by selling their huge data base to marketing companies.
Advertising and data licensing are the major sources of revenue
Twitter Inc. (TWTR), the social media company founded 15 years ago, is now ubiquitous via its posts – called tweets – on the Internet and all forms of media. It’s best known for news-breaking tweets from politicians and celebrities, but it provides a platform for millions of users to publish their thoughts, interact, share content, and read breaking news. The platform itself is free to use for individuals and businesses alike. Once a user has created an account, they can post messages (“tweets”) of up to 280 characters and up to 2,400 times per day, which are automatically distributed to followers in a feed that is constantly refreshed.12 Twitter divides its revenue into two categories: the sale of advertising services, which constitutes the vast majority of the company’s revenue, as well as data licensing and other services.3 Twitter’s major competitors include other social media companies like Facebook Inc. (FB) and Alphabet Inc. (GOOG).
Twitter’s Financials
In its 2020 fiscal year (ended December 31, 2020), Twitter reported a net loss of $1.1 billion, a significant change from the net income of $1.5 billion generated in 2019. Annual revenue, however, rose 7.4% to $3.7 billion for the year.4 The net loss in 2020 was largely due to a $1.1 billion non-cash charge related to a provision for income taxes. Also, the net income in the previous year was partly inflated by a $1.21 billion non-cash benefit from income taxes.5
Twitter’s Business Segments
Twitter has a single operating segment and reporting structure.6 However, in its financial reporting the company does separate its revenue into two categories: Advertising Services; and Data Licensing and Other.4
Advertising Services
Advertising services generated $3.2 billion, or about 86%, of Twitter’s revenue in 2020. The segment’s revenue rose 7.1% compared to 2019.4 Twitter generates most of its advertising revenue by selling promoted products, including promoted tweets, promoted accounts, and promoted trends, to advertisers. The company creates tailored advertising opportunities by using an algorithm to make sure promoted products make it into the right users’ timelines, “Who to Follow” lists, or at the top of the list of trending topics for an entire day in a particular country or globally. Advertisers also have the option of paying for in-stream video ads delivered to a targeted audience or sponsoring video content from publishing partners. While the majority of revenue from advertising services is generated through Twitter’s owned and operated platform, a small portion of the advertising products Twitter sells are also placed on third-party publishers’ websites, applications, and other offerings.7
Data Licensing and Other
Nearly 14% of Twitter’s revenue in 2020, or $509.0 million, was from data licensing and other sources. Revenue for the segment grew 9.2% compared to the previous year.4 Twitter also sells subscriptions to public data beyond its public API to companies and developers looking to “access, search and analyze historical and real-time data” on the platform. The “other sources” includes service fees Twitter collects from users of its mobile ad exchange, MoPub.8
Twitter’s Recent Developments
Twitter, as well as social-media rival Facebook, began adding labels to posts on their platforms over false or misleading claims about the U.S. presidential election in November 2020, including posts from former President Donald Trump. Trump and others were tweeting misleading claims about winning the election before final results had been determined. Twitter added labels to inform users about the potential inaccuracy of the information contained in such tweets.9 Social media companies have been under increased public scrutiny in recent years over how they monitor user-posted content on their sites.
On January 8, 2021, Twitter permanently suspended Trump’s account, citing “risk of further incitement of violence.” Twitter said that tweets by Trump were very likely to encourage people to carry out similar criminal acts as the ones that took place at the U.S. Capitol just days earlier.10
How Twitter Reports Diversity & Inclusiveness
As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Twitter and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Twitter releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.