“I hate advertising”Elon Musk tweeted in 2019.
Ever since he started pursuing his own $ 44 billion purchase of Twitter – and for years before – the richest man in the world made it clear that advertising wasn’t a priority. He talked about making money from Twitter by other means, like by charging some users be on the site. He also suggested that he want to relax the service content moderation policieswhich according to marketers has helped prevent ads from running along with hate speech and disinformation.
But as Mr. Musk prepares to take control of Twitter, he may quickly discover that Twitter needs Madison Avenue more than the other way around.
Ads make up about 90 percent of Twitter’s revenue. Yet long before the acquisition of Mr. Musk, many agency leaders were lukewarm about advertising on the service. They cited a litany of complaints, including that the company can’t target ads nearly as much as competitors like Facebook, Google, and Amazon.
Now, numerous advertising executives say they are willing to move their money elsewhere, especially if Mr. Musk removes the safeguards that allowed Twitter to remove racist rants and conspiracy theories. An exodus of advertisers would undermine the company, underscoring the difficulty of balancing Mr. Musk’s vision of Twitter as a haven for free speech with the business relationships that keep it going.
But the Twitter co-founder and at least some investors who signed up to Musk’s offer rejected the need for advertising and insisted that the company must step away from it. Twitter’s status as a “public company that relies solely on the advertising business model” has added to its problems with bots, abuse and censorship, Ben Horowitz saidgeneral partner of venture capital firm Andreessen Horowitz, which is investing $ 400 million in an effort to make Twitter private.
Jack Dorsey, the co-founder of the company, agrees. “That’s true. He needs cover for a while,” Mr Dorsey said in a tweet answering Mr. Horowitz.
Advertisers said such a change would harm Twitter. “At the end of the day, it’s not the brands that have to worry because they’ll only be spending their budgets elsewhere – it’s Twitter that has to worry,” said David Jones, a longtime advertising executive and CEO of BrandTech Group, a technology company. of marketing. “If you told me that TikTok is gone, it would be a disaster. But does Twitter go away? Yeah whatever.”
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Soon after Mr. Musk reached an agreement to buy Twitter earlier last week, company executives began contacting advertising clients, according to regulatory documents and several people who received the messages. Executives e-mailed assurances that business would continue as usual and that lines of communication would remain open. Brand safety, they said, remained a “priority”.
Twitter reps also noted that it will likely take months, if not more than a year, for serious changes to take effect, advertising executives said.
On Wednesday evening, at NewFronts’ annual Twitter advertiser presentation at New York’s Pier 17, company reps highlighted the value of Twitter for marketers: as a premier destination for people to get together and discuss important moments. cultural events such as sporting events or the Met Gala, increasingly through video messages Presenters have pledged to help brands reach a fragmented audience, and executives have repeatedly thanked advertisers and agencies for their trust and collaboration.
The pending acquisition of Mr. Musk and what it could mean for advertisers was not mentioned during the brief presentation.
“It’s been a quiet month for Twitter,” joked JP Maheu, Twitter’s vice president for global client solutions.
Representatives of Mr. Musk did not respond to a request for comment on his plans for advertising on Twitter. Twitter declined to comment.
Twitter is different from Facebook, whose millions of small and medium-sized advertisers generate the majority of the company’s revenue and depend on its huge size and targeting capabilities to reach customers. Twitter’s clientele is heavily burdened by large traditional companies, which tend to be wary of their ads appearing alongside problematic content.
Twitter earns the vast majority of its ad revenue from brand awareness campaigns, the effectiveness of which is much more difficult to gauge than ads that target users based on their interests or push for a direct response, such as by doing clicks on a website. The company has been trying for years to make its platform a better destination for ads that drive measurable sales and rebuilt its ad server in 2019 and 2020 to meet marketer demands. In March, Twitter began allowing advertisers in the United States to add commercial catalogs presented the best products for anyone who visits their profiles.
Twitter’s reach is even narrower than many rivals, with 229 million users seeing ads, compared to 830 million users on LinkedIn and 1.96 billion daily users on Facebook. Stifel analysts recently wrote to clients that Twitter was “still considered a fairly niche platform by many in the advertising industry.”
Last month, Twitter said so $ 1.2 billion in revenue during the first three months of the year it increased by 16% over the previous year, but is still lagging behind the growth rate expected by the company. While it was profitable in the quarter, the company has lost money in eight of the past 10 years.
At advertising agency Chemistry, whose clients include national healthcare companies and restaurant chains, Twitter accounts for about 10 percent of social media budgets, said Jason Dille, who plans overseas media.
“Even those like LinkedIn have eclipsed our ability to target consumers beyond what Twitter is providing,” he said. “We will go where the results are and, with many of our clients, we have not seen the advertising performance on Twitter that we have with other platforms.”
But for Mr. Dille and many others, Twitter’s attitude towards content control was a positive point. In 2019, it all political ads banned. The company introduced Warning labels on election misinformation, deleted falsehoods about vaccines and, after the Capitol uprising last year, permanently banned former President Donald J. Trump. Last month, in response to the war in Ukraine, the platform came to a halt amplifying the accounts of the Russian government and started blocking some tweets containing pictures of prisoners of war. A few days before the announcement of the deal with Mr. Musk, Twitter said it would be ban advertisements that deny climate change.
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“Twitter has done a better job of building trust with advertisers than many platforms – they’ve been more progressive, more responsive, and more humble in starting ways to learn,” said Mark Read, CEO of WPP, one of the largest companies. advertising in the world.
Now, many advertisers say that while they will wait to see what Mr. Musk will do, they are concerned that a decade of protective scaffolding may be dismantled.
“We can safely say that if content moderation policies change and if there is no way for us to protect the brand, we will definitely recommend our customers to withdraw their investments,” said Arun Kumar, chief data and technology officer at the advertising giant IPG.
Several advertising executives said they doubted that Mr. Musk would consider their concerns due to his track record with the industry.
Mr. Musk, one of the founders of the successful electric car company Tesla and the rocket company SpaceX, does little marketing for these businesses. On Twitter, he criticized the ads as “manipulate public opinion“and discussed his refusal to”pay famous people to pretend to approve. “ When written in a from the deleted tweet on Twitter Blue, recently introduced Subscription service of $ 3 per monthpushed for “no advertising”, explaining that “the power of companies to dictate policy has greatly increased if Twitter depends on advertising for money to survive.”
“I don’t think he cares about the Twitter ad experience because he never cared about advertising,” said Harry Kargman, chief executive of mobile advertising firm Kargo. “I don’t think it’s just about getting advertisers to spend money on the platform beyond what’s automated.”
Mr Musk suggested that Twitter focus on subscriptions; others have suggested a pay-per-tweet model. But some advertising executives hope Musk’s competitive spirit will inspire him to restore Twitter as a powerful marketing machine.
“There is a crossroads, where Path A leads to an unfiltered place with the worst human behavior and no brand wants to come close to it,” said Jones of BrandTech. “And Path B has it one of the brilliant entrepreneurs in the worldwho knows a lot about running companies, sparking a wave of innovation that has led people to look back a few years and say, “Remember when everyone was worried about Musk’s arrival?” “