Like many people, I'm a fan of Twitter. I use it to show pictures to my friends, and to keep up with the latest news. I do see Twitter ads, but I have never once engaged with one. I often wonder who does.
Twitter ads work in two ways - you can either promote your tweets or promote your account. Promoted accounts are displayed on Twitter's who to follow widget, while promoted tweets appear in users' timelines. Like many digital marketing platforms, Twitter only charges for the promoted tweets or accounts when a user engages with the advertisement by following the account, retweeting the tweet, or clicking on a link. Advertisers must place bids to get ads shown, and they can target their ads to users with particular tastes. Advertisers can also set daily and campaign budgets.
Twitter's initial public offering filing gives us information about how much money Twitter is currently making from advertising. According to the New York Times, Twitter's revenues were $317 million in 2012, and 85 percent of that revenue was from revenue. Sixty-five percent of the advertising revenue came from mobile devices. Although these revenues may be small when compared to behemoths like Google and Facebook, Twitter's growth is rapid. Its revenues tripled from 2011 to 2012, and its user base has grown 44 percent in the same period of time. It remains to be seen whether Twitter's growth will enable it to compete, especially as Amazon continues to make inroads into the digital advertising market. But with $1 billion to spend following its IPO, you cannot count Twitter out.
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