While Elon Musk has repeatedly reiterated that his purchase of Twitter is about securing freedom of speech, and that recouping the $44 billion he paid for the corporate doesn’t matter, he still has bills to pay, and investors to make whole as he goes about reforming the business.
Which is why the most recent reports on Twitter’s ad sales are vital, with the New York Times reporting that Twitter’s U.S. ad sales are down 59% year-over-year, reflecting worsening ad sales at the corporate over time, despite Musk’s assurances that advertisers had been steadily coming back to the platform.
According to the Times, Twitter recently shared an internal overview of its ad sales performance, which showed that total ad sales are down 59%, while the corporate is commonly falling in need of its U.S. weekly sales projections. That’s worse than the 50% decline that Musk confirmed back in March, which suggests that companies are still spooked by Musk’s reformations on the app, which have included recent rules around acceptable speech, and reinstatements of a number of the platform’s most controversial users.
And Musk himself hasn’t helped its case. He continues to share his often controversial opinions on hot-button topics, including gender affirmation, the war in Ukraine, the federal government’s COVID response, population collapse, crime, immigration, and more.
Which, after all, was the entire point of his Twitter takeover in the primary place. Musk says that he bought Twitter to fight totally free speech, and battle against mass media censorship, and that, in some ways, is a noble stance. But the side effect is that Twitter’s ad revenue goes to take a success in consequence.
And when that income stream makes up some 90% of your organization’s revenue, that could be a difficult path to take.
Musk’s most up-to-date stance on this front saw two of his top brand safety experts move on from the corporate, after Musk sought to reverse their decision on supporting the discharge of a controversial anti-trans documentary. Musk demanded that the principles around such be watered down, while also promoting the documentary on his own profile, which led to each Ella Irwin, the platform’s head of trust and safety, and AJ Brown, Twitter’s chief of brand name safety, leaving the corporate in consequence.
That’s led to yet one more recent swell of concern amongst ad partners, on condition that Twitter’s brand safety team has now been further weakened, and bent to Musk’s ideological will, which could see Twitter’s ad revenue decline even further in the approaching months.
Musk, after all, has also been in search of to enhance Twitter’s income streams by adding in recent elements, primarily via subscriptions, each to Twitter itself and to individual creators within the app. Musk had been hoping that subscriptions to Twitter Blue would eventually make up 50% of Twitter’s revenue intake, but to date, despite Musk removing legacy verified ticks, and forcing advertisers to pay for Blue to maintain running ads, Twitter Blue take-up has remained at lower than 0.3% of Twitter’s total user base, akin to around $16.8 million per quarter.
That’s a tiny fraction of the $1.18 billion in revenue that Twitter brought in in Q2 2022, the corporate’s last revenue update before Musk took over on the app.
Even if that total revenue number has declined by half now, Twitter Blue income continues to be only a fractional element in Twitter’s broader revenue pie, while price increases to Twitter’s API also appear to have had negative impacts on usage.
Essentially, because it stands right away, despite Musk’s efforts, Twitter still needs numerous ad dollars to maintain running, or it’ll run the danger of going out of business – even with 80% fewer staff to pay. This is the situation that incoming Twitter CEO Linda Yaccarino will inherit when she takes the reigns on the app shortly, with Yaccarino also bringing over other former NBCU ad execs to assist her re-build Twitter’s ad business, and win back advertiser trust.
It’ll be a tall order — especially as Musk continues to publicly advocate for controversial approaches to certain topics. But Yaccarino has numerous experience in constructing such a business, as long as she’s capable of thrust back on Musk’s various whims, and be sure that he doesn’t proceed to spook already wary brand partners.
That possibly an not possible task, given Musk’s stated ambitions for the app.
Again, on one hand, adhering to his vision of free speech, despite the potential, personal losses that he may incur for such is admirable. On the opposite, this stance could proceed Twitter’s downward spiral, even with the perfect efforts of top ad execs on its side.
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