Elon Musk’s Twitter profile page appears on an Apple iPhone mobile phone.
Nurfoto | Nurfoto | Getty Images
When Elon Musk said this last week Twitter experienced a “major decline in revenue” under his last stewardship, which he attributed to “activist groups putting pressure on advertisers.”
There was some basis in his claim. A group of civil rights leaders sent a letter to the CEOs of major companies including Anheuser-Busch, Apple, Coca-Cola and Disney, urging them to raise their concerns about brand safety on the site with Musk. It will then call on those companies to freeze ad spending on Twitter following what group leaders see as an increase in racist posts and hate speech.
While Musk is right to attribute some of the revenue decline to activist pressure, at least some of the blame lies with him. The new owner of Twitter, the world’s richest man, recently tweeted a conspiracy theory about the attack on House Speaker Nancy Pelosi’s husband, Paul Pelosi, and made a series of crude and second-rate jokes, some of which he quickly deleted.
Rachel Tipograph, CEO of ad tech firm MikMak, says businesses don’t want to associate their brands with this kind of behavior and content.
“There are concerns about brand safety with advertisers, and that’s really it,” Tipograph said. “Advertisers don’t want to be associated with what’s happening on Twitter right now.”
companies like General Motors and Volkswagen halted spending on Twitter following Musk’s arrival, while advertising titan Interpublic Group advised its clients to do the same. The boycott poses a serious challenge for the social media service, which gets 90% of its sales from advertising.
Compared to larger competitors Facebook and Google, Twitter has never been able to grow its online advertising business to the scale of its impact on popular culture and society at large. Twitter has lost money in six of the eight years since its IPO. In 2021, its revenue reached $5 billion, Facebook had $118 billion in sales, and Google parent Alphabet had $257 billion in revenue.
Twitter’s second-quarter revenue was down from a year ago.
“In my humble opinion, to use a very technical term, they’re doing badly and they need a radical transformation,” said Len Sherman, an assistant professor of business at Columbia Business School.
It’s a business that Musk spent $44 billion to buy. As part of the deal, it borrowed $13 billion and must pay it back.
For that investment, it “acquired a company with very poor targeting capabilities in an ad-based business that was important,” Sherman said. “I’m kind of laughing because I keep getting ads on Twitter in my feed for companies that would be better targeted at 13-year-old girls.”
Musk is holding an audio meeting with advertisers on Twitter Spaces on Wednesday.
Twitter did not respond to requests for comment.
The YouTube approach
After the acquisition closed in late October, Musk did himself no favors. Along with his questionable tweets and retweets, he’s been inconsistent about what he means by free speech and acceptable content on the platform, and he almost immediately fired nearly 50% of his Twitter staff, raising further questions about content moderation. .
Companies usually stop advertising campaigns when they feel that they might damage their reputation. For example, businesses boycotted Alphabet’s YouTube in 2017 because its ads could be shown alongside extremist videos.
YouTube executives responded quickly at the time, allowing third-party verification of content and hiring more people to remove offensive videos. The advertisers returned and business immediately resumed.
Musk prefers to fight against advertisers. In response to a tweet that advised Twitter to name boycotting brands so its followers could boycott those brands, Musk said, “If this continues, it’s a thermonuclear name and a shame.”
Meanwhile, Musk is taking a sophisticated approach to banning users. Twitter fired comedian Kathy Griffin for impersonating Musk on the site, while it also temporarily suspended comedian Sarah Silverman’s account for a similar offense.
Jeff Seibert, Twitter’s former head of consumer products, called it “a mistake for Elo to be the face of content moderation.” In the past, Twitter has taken a team approach to policy violations.
“If you put one person in charge of it, I think that’s when you start to see such haphazard decisions [cause people to] lose faith,” Seibert said.
Kathy Griffin attends the premiere of ‘A Hell of a Story’ during the 2019 SXSW Conference and Festival at Zach Theater on March 11, 2019 in Austin, Texas.
Tim Mosenfelder | Getty Images Entertainment | Getty Images
Twitter’s advertising business has already begun to deteriorate under Musk.
Data from MikMak, whose clients include Colgate, Unilever and General Mills, shows a broad decline in ad spending on Twitter. According to MikMak, between October 1 and November 7, media traffic on Twitter dropped 68%, which refers to the number of times people click on ads.
Before that, the numbers kept growing. Twitter’s media traffic grew 56.3% from July 1 to September 30, and 326% from April 1 to June 30.
“We were actually seeing an increase in Twitter traffic,” Tipograph said. “As Elon Musk’s potential ownership approaches, we’ve seen a significant shift in traffic.”
According to CNBC, it will be difficult to keep up with any technological and business improvements that have taken place, as the massive layoffs have been directed at Twitter’s global marketing team, whose responsibilities include reporting and measuring ad performance.
“Pay $8 now”
Musk has focused on subscriptions as the key to reviving Twitter’s finances. It has come up with an offer of $8 per month that allows people to “verify” and gain premium features. Critics have been so vocal that Musk tweeted a photo of a T-shirt on Monday that read, “Your opinion is appreciated. Now pay $8.”
Musk has previously hinted that he wants to turn Twitter into a super app similar to China’s WeChat, where people can use it to talk to friends, watch movies and buy goods.
Still, he will need partners willing to work with him. Jeanine Turner, a professor in Georgetown University’s Communication, Culture and Technology program, said its aggressive stance against companies that stop advertising on the site doesn’t look good because it maintains other partnerships.
“I think the biggest issue for him is going to be confidence,” Turner said. “I don’t see people trusting him with all that information.”
As for advertisers, many brands don’t consider Twitter an essential tool for their outreach, given its less sophisticated ad tracking technology and targeting capabilities. Other possibilities are emerging, such as connected TVs and streaming services Amazon’s Tipograph said there is a growing online advertising business for retail-oriented companies.
Jessica González, CEO of the nonprofit Free Press, was not impressed with Musk’s antics. González was among the civil rights leaders who spoke with Musk last week and expressed concern about the rise of hate speech against black and Jewish groups on Twitter. It’s the same group calling on advertisers to stop their campaigns.
Gonzalez said he was willing to give Musk the “benefit of the doubt” when he told the group that Twitter had aligned with them. But between his follow-up rhetoric and cutting his staff in half, she has serious doubts about whether he’s worth working with.
Asked if he would hold another meeting with Musk to discuss Twitter’s approach to offensive content, he said, “I don’t know.”
“Just because he made some promises in that meeting and then went back on them like two days later,” Gonzalez said.
Correction: This article has been updated to correct the spelling of House Speaker Nancy Pelosi’s name.
LOOK: The opportunities on Twitter are huge