Elon Musk hates ads. Twitter needs you. That can be a problem.

i hate advertising”, tweeted Elon Musk in 2019.

Ever since he began seeking to buy Twitter for $44 billion, and for years before that, the world’s richest man has made it clear that advertising is not a priority. He has talked about making money from Twitter through other means, such as charging some users to be on the site. He also suggested that he wants to relax the service’s content moderation policies, which marketers say have helped prevent ads from appearing alongside hate speech and misinformation.

But as Musk prepares to take over Twitter, he may quickly discover that Twitter needs more of Madison Avenue than the other way around.

Ads account for about 90 percent of Twitter’s revenue. Long before the Musk takeover, however, many agency leaders were lukewarm about advertising on the service. They have cited a litany of complaints, including that the company can’t target ads as well as competitors like Facebook, Google and Amazon.

Now, numerous ad executives say they’re willing to move their money elsewhere, especially if Musk removes the safeguards that allowed Twitter to remove racist rants and conspiracy theories. An exodus of advertisers would weaken the company, underscoring the difficulty of balancing Musk’s view 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 joined Musk’s bid rejected the need for publicity and insisted the company be spun off. Twitter’s status as “a public company that relies solely on the advertising business model” added to its problems with bots, abuse, and censorship. Ben Horowitz saidGeneral partner at venture capital firm Andreessen Horowitz, which is investing $400 million in the effort to take Twitter private.

Jack Dorsey, co-founder of the company, agreed. “This is true. He needs coverage for a while,” Mr. Dorsey said. he said in a tweet responding to Mr. Horowitz.

Advertisers said such a change would hurt Twitter. “At the end of the day, it’s not the brands that need to worry because they’ll just spend their budgets elsewhere; it’s Twitter you need to worry about,” said David Jones, a longtime advertising executive and CEO of the Brandtech Group, a marketing technology company. “If you told me that TikTok is gone, it would be a disaster. But is Twitter going away? Yeah, whatever.”

Immediately after Musk struck a deal to buy Twitter early last week, company executives began reaching out to ad clients, according to regulatory filings and multiple people who received the messages. The executives assured by email that business would continue as usual and that the lines of communication would remain open. Brand safety, they said, remained a “priority.”

Twitter representatives have also noted that it will likely be months, if not more than a year, before any serious changes take effect, advertising executives said.

Wednesday night, at Twitter’s annual NewFronts presentation for advertisers at Pier 17 in New York, company representatives highlighted Twitter’s value to marketers: as a premier destination for people to meet and discuss important cultural moments like sporting events or the Met Gala, increasingly through video. Posts Presenters pledged to help brands reach fragmented audiences, and executives repeatedly thanked advertisers and agencies for their trust and partnership.

Musk’s pending acquisition and what it could mean for advertisers were not mentioned during the short presentation.

“It’s been a quiet month on Twitter,” joked JP Maheu, Twitter’s vice president of global customer solutions.

Musk’s representatives did not respond to a request for comment about his Twitter advertising plans. Twitter declined to comment.

Twitter differs from Facebook, whose millions of small and medium-sized advertisers generate most of the company’s revenue and rely on its sheer size and targeting ability to reach customers. Twitter’s clientele is largely made up of big mainstream companies, who tend to be wary of their ads appearing alongside problematic content.

Twitter derives the vast majority of its advertising revenue from brand awareness campaigns, the effectiveness of which is much more difficult to assess than ads that target users based on their interests or that ask for a direct response, such as a click. a website. The company has been trying for years to make its platform a better destination for ads that drive measurable sales, and it rebuilt its ad server in 2019 and 2020 to meet seller demands. In March, Twitter began allowing advertisers in the United States to add shopping catalogs that exhibited the best products for anyone who visits their profiles.

Twitter’s reach is also smaller than many rivals, with 229 million users seeing ads, compared to LinkedIn’s 830 million users and Facebook’s 1.96 billion daily users. 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 its $1.2 billion in revenue for the first three months of the year was up 16 percent from a year earlier, but still below the growth rate the company had projected. While it was profitable in the quarter, the company has lost money in eight of the last 10 years.

At advertising agency Chemistry, whose clients include health care companies and national restaurant chains, Twitter accounts for about 10 percent of social media budgets, said Jason Dille, who oversees media planning.

“Even the likes of LinkedIn have overshadowed our ability to target consumers beyond what Twitter offers,” he said. “We’ll go where the results are, and with a lot of our clients, we haven’t seen the performance on Twitter from an advertising perspective that we have with other platforms.”

But for Dille and many others, Twitter’s attitude toward content controls was a bright spot. In 2019, he banned all political ads. The company introduced warning labels about election-related misinformation, removed falsehoods about vaccines and, after last year’s Capitol riots, permanently banned former President Donald J. Trump. Last month, in response to the war in Ukraine, the platform stopped amplifying Russian government accounts and began blocking some tweets containing images of prisoners of war. Days before the deal with Musk was announced, Twitter said that ban ads that deny climate change.

“Twitter has done a better job than many platforms at building trust with advertisers – they’ve been more progressive, more responsive and more humble in initiating ways to learn,” said Mark Read, CEO of WPP, one of the world’s largest advertising companies. large. in the world.

Now, many advertisers say that while they will wait to see what Musk does, they are concerned that a decade of protective scaffolding will be dismantled.

“We can safely say that if the content moderation policies change, and if there is no way for us to protect the brand, we will definitely advise our clients to withdraw their investments,” said Arun Kumar, the ad giant’s chief data and technology officer. IPG.

Several advertising executives said they doubted Musk would consider their concerns given his background in the industry.

Musk, one of the founders of the successful electric car company Tesla and rocket company SpaceX, does little marketing for those businesses. On Twitter, he has criticized the ads as “manipulate public opinion” and discussed his refusal to “pay famous people to falsely endorse.” When writing in a since deleted tweet on Twitter Blue, the recently unveiled $3-a-month subscription service, he pushed for “no ads,” explaining that “the power of corporations to dictate policy is greatly increased if Twitter relies on advertising money to survive.”

“I don’t think he cares about the advertising experience on Twitter because he’s never cared about advertising,” said Harry Kargman, chief executive of mobile ad company Kargo. “I don’t think it’s about convincing advertisers to spend money on the platform beyond automation.”

Musk has suggested that Twitter focus on subscriptions; others have suggested a pay-per-tweet model. But some ad executives hope Musk’s competitive spirit will inspire him to reestablish Twitter as a powerful marketing machine.

“There’s a fork in the road, where Route A leads to some unfiltered place with the worst human behavior and no brand wants to go near it,” said Brandtech’s Mr. Jones. “And Path B has one of the world’s genius entrepreneurs, who knows a lot about running companies, unleashing a wave of innovation that makes people look back a few years and say, ‘Remember when everyone was worried about the arrival of of Musk?’”

Add Comment