Elon Musk’s Twitter profile page seen on an Apple iPhone mobile phone.
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When Elon Musk said that last week Twitter Having experienced a “massive drop in sales” under his recent tutelage, he blamed “activist groups who pressured advertisers” for the drop.
His assertion had some justification. A group of civil rights activists had sent a letter to the CEOs of major companies, including Anheuser-Busch, Apple, Coca-Cola and Disney, urging them to escalate their concerns about brand safety on the site to Musk. The group later urged these companies to stop ad spending on Twitter after their leaders saw a surge in racist posts and hate speech.
While Musk is correct in attributing some of the drop in sales to activist pressure, at least some of the blame lies with him. Twitter’s new owner, the world’s richest person, recently tweeted a conspiracy theory surrounding the attack on Paul Pelosi, husband of House Speaker Nancy Pelosi, and made a series of raw and second jokes, some of which were quickly deleted.
Companies don’t want to associate their brands with this type of behavior and content, said Rachel Tipograph, CEO of advertising technology company MikMak.
“Advertisers have brand safety concerns, and that’s really what it’s about,” Tipograph said. “Advertisers do not want to be associated with the events that are happening on Twitter right now.”
company like General Motors and Volkswagen suspended their spending on Twitter following Musk’s arrival, while advertising giant Interpublic Group advised its clients to do the same. The boycott poses a significant problem for the social media service, which derives 90% of its revenue from advertising.
Compared to larger competitors Facebook and Google, Twitter never managed to develop an online advertising business commensurate with the extent of its impact on popular culture and society at large. Twitter has lost money in six of the eight years since it went public. Its 2021 revenue reached $5 billion, while Facebook’s revenue was $118 billion and Google’s parent company Alphabet reported revenue of $257 billion.
Twitter’s second-quarter revenue fell year over year.
“In my humble opinion, to use a very technical term, their business sucks and they need radical transformation,” said Len Sherman, associate professor of business administration at Columbia Business School.
It’s a deal Musk spent $44 billion to buy. As part of the deal, he borrowed $13 billion that he has to pay back.
For that investment, he got a company with “very poor targeting skills in an ad-based business where it’s imperative,” Sherman said. “I’m kinda laughing because I keep getting sponsored ads on Twitter in my stream 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
Musk didn’t do himself any favors after the acquisition, which closed in late October. In addition to his own questionable tweets and retweets, he has been inconsistent in spelling out what he understands by free speech and acceptable content on the platform, and he abruptly fired about 50% of Twitter employees almost immediately, raising further questions about content moderation .
Companies typically stop their advertising campaigns when they feel their reputation might be damaged. For example, companies boycotted Alphabet’s YouTube in 2017 over concerns that their ads would play alongside extremist videos.
YouTube executives were quick to respond, allowing third-party review of content and hiring more people to take down the offending videos. Advertisers came back and business promptly recovered.
Musk would prefer to be combative towards advertisers. In response to a tweet recommending that he name the brands that Twitter is boycotting so his followers can boycott those brands, Musk said, “A thermonuclear name and shame is exactly what will happen if this continues.”
Meanwhile, Musk is taking a complicated approach to banning users. Twitter solicited comedian Kathy Griffin for impersonating Musk on the site, while comedian Sarah Silverman’s report was temporarily shut down for a similar offense.
Jeff Seibert, Twitter’s former head of consumer product, called it “a mistake for Elon to be the face of content moderation.” Historically, Twitter has taken a team approach to policy violations.
“If you hire a person to do this, I think you’re going to see random decisions like this [cause people to] lose trust,” said Seibert.
Kathy Griffin attends the premiere of “A Hell of a Story” during the 2019 SXSW Conference and Festival at the Zach Theater on March 11, 2019 in Austin, Texas.
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Twitter’s advertising business has already started to deteriorate under Musk.
Data from MikMak, whose clients include Colgate, Unilever and General Mills, shows a broad decline in ad spend on Twitter. From October 1st to November 7th, Twitter suffered a 68% drop in media traffic, which refers to the number of clicks on an ad, according to MikMak.
Previously, the numbers had increased. Twitter media traffic increased by 56.3% from July 1 to September 30 and by 326% from April 1 to June 30.
“We’ve actually seen an increase in Twitter traffic,” Tipograph said. “As soon as Elon Musk’s potential ownership got closer and closer, we saw a definite shift in traffic.”
Whatever technical and business improvements have taken place, these mass layoffs will be difficult to sustain because the mass layoffs have impacted Twitter’s global marketing team, whose responsibilities include reporting and metrics surrounding ad performance, CNBC reported.
‘Now pay $8’
Musk has turned his focus to subscriptions as key to reviving Twitter’s finances. He launched an offer for $8 per month that allows people to get “verified” and get premium features. The critics were so vocal that on Monday Musk tweeted a picture of a t-shirt that read, “Your feedback is appreciated. Now you pay 8 dollars.”
Musk has previously hinted that he wants to turn Twitter into a so-called super app, similar to China’s WeChat, that can be used to talk to friends, watch movies, and buy goods.
Nevertheless, he needs partners who want to work with him. And his aggressive stance on companies that have paused ads on the site doesn’t look good as he pursues other partnerships, said Jeanine Turner, a professor in Georgetown University’s Communications, Culture and Technology program.
The “big issue for him, I think, would be trust,” Turner said. “I don’t see people trusting him with all this information.”
As far as advertisers are concerned, many brands don’t consider Twitter as an essential sales channel due to its less sophisticated ad tracking technology and targeting capabilities. Other possibilities are emerging, such as B. connected TVs and streaming services as well Amazon’s growing online advertising business for retail-oriented businesses, Tipograph said.
Jessica González, the co-CEO of the nonprofit group Free Press, is unfazed by Musk’s antics. González was one of the civil rights leaders who spoke to Musk last week and expressed concern about the rise of hate speech against black and Jewish groups on Twitter. It’s the same group that asked advertisers to stop their campaigns.
González said she was willing to grant Musk “if in doubt” when he told the group that Twitter was in league with them. But between his subsequent rhetoric and the elimination of half the staff, she has serious doubts as to whether he is worth working with.
When asked if she would meet with Musk again to discuss Twitter’s approach to objectionable content, she said, “I don’t know.”
“Only because he made some promises at that meeting and then went back on them about two days later,” González said.
Correction: This article has been updated to correct the spelling of House Speaker Nancy Pelosis’s name.
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