Twitter Inc’s (TWTR) $277 Million Advertising Business

Finally, the third advertising method Twitter uses is “Promoted Trends.”

“When a user clicks on a Promoted Trend, search results for that trend are shown in a timeline and a Promoted Tweet created by the advertiser is displayed to the user at the top of those search results,” Twitter officials said in their last earnings report.

While advertising accounts for the lion’s share of Twitter’s revenue, the company generates 11% from another source. And it’s a revenue stream that could have a big future with the company…

Where the Rest of Twitter’s Money Comes From

In Q2, TWTR reported nearly $35 million in revenue from its “data licensing” business. Essentially, Twitter sells the content of tweets to third-party buyers, mostly marketers.

Data licensing may only account for 11% of Twitter’s revenue, but that $35 million was an increase of 90% from the previous year.

Money Morning‘s Defense and Tech Specialist Michael A. Robinson thinks Twitter’s data licensing or “Big Data” business could play a key role in the company’s future.

“One area that will be interesting is the Big Data aspect,” Robinson said. “Twitter is a goldmine for data with the number of users and tweets they have. Twitter has tons and tons of data, almost an incomprehensible amount.”

Twitter has made nine acquisitions totaling nearly $470 million in the Big Data industry. Its most recent acquisition came in April when it bought Gnip, a company that packages and sells massive amounts of data from large companies.

The company says that data licensing will represent a smaller percentage of its revenue in the future, but that’s only because advertising is expected to grow at a faster rate.

Regardless of which revenue stream grows faster, the number that will dictate Twitter’s overall revenue growth is monthly active users.

As the MAU figure grows, Twitter will have a larger group to advertise to and a larger pool of data to draw from for its data-licensing business.

Money MorningWritten By Kyle Anderson From Money Morning

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