By now, almost everyone and their mother knows that Elon Musk purchased Twitter in the hopes that he would eventually transform it into this bastion of free speech and unhindered opinions, even if that didn’t recoup the $44 billion he spent to acquire the company. Of course, he still has bills to pay, so that won’t check out well, not to mention investors to make whole as he goes about reforming the business.
This is also why the latest reports on Twitter ad sales are important, with The New York Timesreporting that US Twitter sales are down 59% YoY, reflecting worsening ad sales over time, despite Musk’s ‘assurances’.
Ground-Rocket
According to NYT, Twitter recently shared an internal overview of its ad sales performance, which showed that total ad sales are down 59%, while the company is regularly falling short of its weekly US sales projections. This suggests that businesses are still a bit restless from all of Musk’s reformations, which have included new rules around acceptable speech, and reinstatements of some of the platform’s most controversial users.
Musk himself hasn’t helped its case. The Chief Twit current continues to share his often eyebrow-raising opinions on hot topics, including gender affirmation, the Ukrainian armed conflict, the Government’s COVID response, population collapse, crime immigration, and more. That, of course, was the whole point of Musk’s takeover – that he bought the platform to fight for free speech and battle against media censorship, which, to be fair, is a noble stance. One big detriment to that plan is the inevitable tanking of its ad revenue. Especially when you consider that that revenue makes up 90% of your company’s total intake, it just becomes all the more challenging of a route to go down.
On this front, Musk’s recent stance led to the removal of two of his top brand safety experts, after he sought to reverse their decision on supporting the release of a controversial, seemingly transphobic documentary. Musk ordered that the rules around such be watered down a bit, while also promoting said documentary as a pinned post atop his profile. As a result, Twitter Head of Trust and Safety Ella Irwin, and Twitter’s Chief of Brand Safety AJ Brown had little choice but to leave the company.
That has led to another swell of concern among ad partners, given that Twitter’s brand safety team is now greatly crippled, and bent to Musk’s ideological will, which could Twitter’s ad revenue to decline even further in the coming months. Of course, Musk has also been seeking to augment Twitter’s income streams by adding new elements, primarily through subscriptions. Musk had been hoping that Twitter Blue subscriptions would eventually make up 50% of the app’s revenue intake, but thus far, it remains at less than 0.3% of its total user base. That roughly amounts to $16.8 million per quarter, which is minuscule compared to the $1.18 billion per quarter Twitter was making before Musk took over.
The Wrap
As it stands right now, despite the impressive amount of changes Musk was able to make, Twitter still needs a lot of ad dollars to stay running, despite already culling nearly 80% of its staff. This will make incoming CEO Linda Yaccarino’s job all that tougher, especially as Musk continues to publicly advocate controversial approaches to certain topics. Yaccarino has the experience to back her up, and as long as she’s able to push back on Musk’s various whims, ensuring that he doesn’t spook already wary brand partners. That might be an impossibility, but hey, they can certainly try.
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