- Elon Musk’s bid for Twitter has big implications for the advertisers who generate his revenue.
- Advertisers fear that the platform will be less suitable for brands and users.
- Facebook and niche platforms like Snap and Pinterest could benefit if advertisers abandon Twitter.
Elon Musk’s $43 billion bid to buy Twitter risks undermining its biggest source of revenue: advertisers.
A Musk takeover is far from done, but a Twitter controlled by the billionaire who has voiced absolutist views on free speech and pondered an ad-free Twitter raises red flags for advertisers and could make some leave the ship.
“Advertisers are increasingly concerned about the control exercised by the platforms and, particularly if this control and this discourse is managed by a single billionaire, this raises questions and concerns, and I would expect that some advertisers are opting out,” said Greg James, global chief transformation officer at Havas Media Group.
Brands can also justify cutting spending from Twitter because it’s less effective than Facebook at driving sales and impact, James added.
Twitter holds just 0.9% of the global digital advertising market, putting it in the neighborhood of other niche advertising players like LinkedIn, Snapchat, Pinterest and Apple, according to Insider Intelligence’s 2022 estimate.
Twitter’s ad challenges predate Musk. It saw weaker-than-expected user and revenue growth in the first quarter. And after growing 3% in 2021, its user growth is expected to slow to 2% and 345 million users this year and 1.6% in 2023.
As advertising experts credit Twitter for its highly engaged users and attempt to make the platform safer for advertisers, such as suspending former President Donald Trump’s account and cracking down on COVID misinformation, they also think it hasn’t done a good job selling itself to advertisers.
“Where and how Twitter appears from a sales perspective just hasn’t kept pace with what its platform, broader social and digital rivals have been doing,” James said.
Twitter’s reliance on big-name advertisers also makes it vulnerable. Pathmatics research found that Twitter’s top spenders by category in 2021 were packaged goods companies, followed by media, financial services and retail. Its top five spenders were Kraft Heinz, Mondelez, Amazon, Nestlé and Disney, which tend to react quickly when things get dicey on a platform.
Facebook, on the other hand, derives most of its advertising from small and medium-sized businesses.
“Major brands are becoming more aware of brand appropriateness, which incorporates brand safety. Thus, a more toxic Twitter would generally be inconsistent with brand appropriateness or safety goals than a more toxic one. brand would have,” said Brian Wieser, global president of business intelligence at the ad buying giant. M group.
If advertisers abandoned the platform, they would probably transfer their money to Facebook and niches
like Snap, Pinterest and even Reddit, which recently took steps to protect itself from branding, advertising experts said. Meanwhile, esports gaming and crypto marketers would fill the void left on Twitter, predicted Matt Rivitz, director of goals at adtech firm Nobl.
Automakers are Twitter’s eighth-largest ad category, per Pathmatics. A Tesla CEO-controlled Twitter might give them yet another reason to reconsider advertising on the platform, though they might also see it as an opportunity if they saw the platform as appropriate.
The idea that Musk would create an ad-free subscription service within Twitter, which could cause people to abandon the platform and make it less valuable to advertisers, is also causing the jitters.
On April 9, Musk floated the idea of making the Twitter Blue subscription service ad-free, saying, “The power of corporations to dictate policy is greatly increased if Twitter depends on ad money to survive.”
“Twitter would lose users both because they don’t want to pay and because of looser content moderation. People don’t like being harassed, fed misinformation, or seeing Hitler memes all the time the same goes for advertisers,” Rivitz said. .
Of course, for some advertisers who value what makes Twitter distinct, the pros may outweigh the cons.
“Twitter is unique across all advertiser options,” said Lou Paskalis, president and chief operating officer of business group MMA Global and Twitter user. “The way news comes on Twitter, the immediate engagement, the opportunity to enjoy cultural events, whether it’s the Oscars, it’s not as immediate on other platforms.”
Twitter declined to comment.