Twitter has quietly become a cash machine
Twitter Is Obscenely Profitable

                                  
                          
                          
                          
                            
                        
                          
                          
                          
                        
                          
                          
                                
                          
                          
                          
                          
                          
                              
                          
                          
                        Twitter is obscenely profitable. Don't believe us? Twitter spent so much time not generating any revenue that everyone just assumes it's still struggling. But in fact Twitter has turned on many revenue products and after some experimentation, by all accounts they're doing well. We're pretty sure the company is very profitable. Let's do some math. First of all, costs. What are Twitter's costs? The company has around 500 employees. A good rule of thumb for a tech company is to figure a cost of $100,000 per employee. That's all of the company's costs, per employee, and includes rent, all those servers, etc. So, roughly, Twitter's costs are probably around $50 million per year. How much revenue do they generate? Twitter has three sources of revenue that we know of: its firehose, Promoted Trends, and Promoted Accounts. Twitter charges for access to its Firehose, all of the tweets in real time. That was the first time Twitter generated any meaningful revenue, selling that data to Microsoft and Google for their search engines. Back then, it was rumored that Twitter would take in $20 million/year deal. Now Twitter's firehose is many times larger but let's be conservative and say it still takes in $20 million/year from the firehose.Promoted Trends are sold out, and they recently upped the price to $120,000. That's per day, and probably even a bit more as they're starting to roll out specific trends for specific countries. To take into account discounts and be conservative let's say Twitter sells $100,000 worth of Promoted Trends 350 days per year, which works out to $35 million in revenue. And finally we have Promoted Accounts. We hear that's the most profitable. What companies want out of Twitter is to be able to increase their follower counts. Twitter's Whom To Follow feature allows it to suggest people to follow accounts. How much money is this making?Well, we don't really know. But there's one way to guesstimate. Twitter has 600 advertisers, CEO Dick Costolo said recently. The minimum buy is $15,000 over 3 months. Some advertisers spend that. Some probably spend millions. Let's take a conservative figure and say each advertiser spends $50,000 on average, which is probably low. That still works out to $30 million in revenue. Let's add it all up, shall we?Costs $50 millionRevenue Firehose: $20 million Promoted Trends: $35 million Promoted Accounts: $30 million Total: $85 millionIn reality, this probably understates things. This is just our gut speaking but we're pretty sure Twitter will break $100 million in revenue this year and is very profitable. If that's true, then why isn't it crowing about it? Especially given the beating it got in the press for so many years for not having a business model?First of all, probably to spite the press.Second of all, probably for competitive reasons. Twitter does compete with Facebook and Google in online advertising. In particular, it competes in creating new, social ad formats. It doesn't want to give the other guys too many clues as to what works and what doesn't.Third of all, most successful companies don't brag about their profits. Google didn't. Zynga didn't. The smart thing is to let others underestimate you, keep looking at you as a toy. In the meantime, you can calmly coin money.And Twitter is almost certainly minting it. And it hasn't even gotten all the low-hanging fruit. Internationalization. Self-serve. And most importantly the service can't stop growing. Once they have the ad model, more users means more profits.At the end of the day, Twitter is the new TV. That makes it a very valuable medium that advertisers will pay to have a space on.  You can quibble with the numbers, but anyone who says Twitter isn't making money isn't paying attention.Don't Miss: How Twitter Makes An Actual Difference In The Real World →
                      
                        
                        
                          
                              
                        
                            
                            
                        
                            
                        
                            
                              Thanks for signing up!
                              
                              
                              Access your favorite topics in a personalized feed while you're on the go.
                                    
                            
                        
                            
                            
                              
                              
                              
                                  By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy. You can opt-out at any time by visiting our Preferences page or by clicking "unsubscribe" at the bottom of the email.
                              
                            
                          
                        
                            
                                
                              
                              
                              
                                  
                        
                          
                        