Twitter's $5 billion a year business hits as Elon Musk clashes with advertisers

Twitter’s $5 billion a year business hits as Elon Musk clashes with advertisers

Elon Musk’s tumultuous reign on Twitter has led to a damaging rift with top brands and marketers, as the social media company’s $5 billion-a-year advertising business has been hit by tensions over moderation of the content and resources.

Several leading ad agencies and media buyers have told the Financial Times that nearly all of the major brands they represent have suspended spending on the social media platform, citing alarm over the ad hoc approach of Musk to control content and the decision to cut much of his ad sales team.

Musk, meanwhile, has sought to personally call the chief executives of some brands that have held back advertising in order to reprimand them, according to a senior industry official, leading others to cut spending to the bare minimum. required in order to avoid a new confrontation with the billionaire entrepreneur.

After several waves of job cuts and departures, Twitter’s Ads sales team has shrunk so much that many agencies no longer have a point of contact in the company and have received little or no communication. in recent weeks, according to four industry insiders.

Some brands were unable to get feedback on past campaign performance due to understaffing, a media buyer said. Others complain that Twitter’s ad systems have also become buggy, making it difficult, if not impossible, to run campaigns.

“It’s quite special. The commotion, the damage, nothing of this magnitude has happened before. Never,” said a senior executive at a major advertising agency.

“He seems to put off even the advertisers who wanted him to succeed,” said another senior advertising agency executive.

Musk is under pressure to pull revenue from Twitter as he faces $1 billion in annual interest payments after he loaded the company with $13 billion in debt to help fund its acquisition of the company. company.

On Oct. 27, the day he closed his $44 billion deal to buy Twitter, the Tesla and SpaceX chief executive sought to reassure marketers that the platform would not become a “landscape hell free for all” despite its plans to relax content moderation restrictions.

Soon after, he organized a series of calls and meetings to reassure top ad agencies and brands. An email, sent in early November and seen by the Financial Times, said of Musk: “He is one of the greatest innovators in the world, and he understands our platform and our product on a level that few people know. He wants to ship exciting things, and he wants to do it fast.

During the meetings, Musk appeared in all the details of how the platform works, two agency executives said, impressing the brands with his knowledge. “He knows more than [former chief executive] Jack Dorsey never did. He immersed himself very deeply in the business,” said a senior executive at a major advertising agency.

However, the relationship quickly soured after Musk laid off more than half of the company’s 7,500 employees, upsetting Twitter’s ad sales team and trust and safety team, and increasing fears that misinformation and hate speech could proliferate on the platform.

Groups such as General Motors, Volkswagen, Carlsberg and General Mills have announced they will suspend spending on the platform in light of moderation issues.

Many players in the advertising industry have struggled to keep up with the changes. Robin Wheeler, who began running Twitter’s ad sales business under Musk after former chief Sarah Personette stepped down, left the company last week. Bloomberg reported that Wheeler was fired by Musk after refusing to fire more people on the ad sales team. Twitter and Musk did not respond to requests for comment.

Musk’s own use of Twitter — including reposting conspiracy theories and interacting with controversial accounts — has also baffled brands who fear their content will be placed alongside toxic messages.

The self-proclaimed ‘free speech absolutist’ angered advertisers further when he relaunched Twitter’s premium subscription service, Twitter Blue, after its ‘blue tick’ feature was abused by copycats, targeting politicians and brands such as Eli Lilly and Lockheed Martin. It initially suspended rollout of the service until there was “strong confidence in stopping spoofing”, saying on Friday it would aim to launch it the following Friday.

Last week, Musk also began rolling back some permanent bans on high-profile figures, such as former US President Donald Trump, though he previously pledged not to do so until he had convened a council of content moderation experts.

When asked on Tuesday why he rolled back the bans without setting up the council as promised, Musk said “a broad coalition of political/social activist groups agreed not to try to kill Twitter by depriving us of advertising revenue if I accepted this condition”. He added: “They broke the deal.” Several left-wing groups have pressured brands to cut spending.

The upheaval appears to have had a ripple effect on Twitter’s advertising technology. Gabby Krite, head of digital operations at The Kite Factory, which previously spent “hundreds of thousands” of dollars a year on the platform, said she was having technical difficulties placing or editing ad campaigns. “Technical issues on campaign management. . . that means it is completely unreliable as a platform to use,” she said.

An analysis by Media Matters, a left-leaning nonprofit, suggested that 50 of the top 100 advertisers – accounting for $750 million in advertising in 2022 – had suspended or announced their intention to suspend spending since Musk took over. barre, and seven others had cut their expenses to a trickle. Those 50 advertisers accounted for $317 million of Twitter’s $5 billion in revenue in 2021, Media Matters said.

Agencies have also issued guidelines. In mid-November, Omnicom Media Group recommended customers suspend spending on the platform, according to three people familiar with the move, following a similar recommendation from Interpublic. WPP’s GroupM last week raised its advertising risk rating on the platform to “high risk”, two people familiar with the matter said.

Omnicom declined to comment. Interpublic and GroupM did not immediately respond to a request for comment.

It is unclear if and when the marks will return. “It’s difficult to have criteria [for returning to the platform] when Musk manages by tweet and something changes on the platform every day, which worries advertisers,” said an executive from another ad agency.

“The best chance for Musk to bring advertisers back to Twitter is to appoint a new CEO,” said Darren Savage, chief strategy officer at Tribal Worldwide. “In particular, one who understands what Twitter is, has credibility with advertisers and users – and then is left alone to do their job.”

#Twitters #billion #year #business #hits #Elon #Musk #clashes #advertisers

Leave a Comment

Your email address will not be published. Required fields are marked *