Tomahawk, WI 10/10/2013 (BasicsMedia) – Twitter Inc has recently emerged as one of the leading social media sites, possibly only second to Facebook in terms of popularity and daily active usage. It is much younger than Facebook and other sites such as LinkedIn, but it has been doing relatively well to the point where it is now planning to launch its own IPO, one year after Facebook did the same. But the most important point is to examine how much this company makes from each of its users, and compare this with what other social media giants also get. This will help determine whether it is doing well or not.

 It is not enough for a company such as  Twitter Inc, or Facebook to give us figures regarding who has the most daily or monthly active users. At the end of the day, what matters, is the company which has the most profitable users. If you have a billion users and they don’t give you much in terms of revenue that will not help your cause. Investors love profits, and this is what will always attract them to your company. Twitter has not included these figures in its IPO filing but this is not to say that they don’t exist, nor does it mean that the data is not important.

Twitter Collects a lot of Revenue from Advertising

Close to 90% of Twitter’s quarterly revenue comes from advertising. The latest quarterly results it released for 2013, indicate that it made around 87% from advertisements, which amounts to $389 million. This translates to around $0.64 from each user every month. If you are to appreciate this amount, you have to compare it with those posted by Facebook and LinkedIn which are the two biggest challengers or competitors to Twitter. While Facebook earns around $1.10 from each user per month, LinkedIn only gets roughly $0.60 from the same user.

Facebook Still Has More Profitable Users Than Twitter Inc

 A close look at the three figures from these different social media giants indicates that Facebook perhaps has the most profitable monthly users. This could be due to  a number of factors ranging from the fact that Facebook is the oldest of the three, and is probably the most popular of the lot as well. All the three companies make this money primarily from advertising although they also get a substantial amount from other sources such as data licensing. The company has the capacity of making more money from several other sources which it is currently evaluating.

 Twitter Inc Has Other Sources it Can use to Increase Revenue

 Twitter Inc may yet increase its revenue based on the fact that the company has reported that close tom 60% of all its users, access the site through their mobile devices. The company is also expected to get more revenue from other sources such as from sales and investments in better technology platforms. Now that it is launching its IPO in the next few weeks, it will have a better motivation of earning more from its users every month than it has managed thus far. This is important since Twitter Inc now owes certain financial responsibilities to Wall Street.

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