“Why are advertisers pulling out of Twitter?” “Why is Twitter on the decline?” These are some of the questions about Twitter that several clients of Socialistic have asked us recently. Not surprising, since advertisers are interested in the credibility of a platform if they plan to invest in it.
Any firm will witness a certain amount of upheaval after an acquisition. This is particularly true if it’s a consumer-facing company, that too in technology. But the drama surrounding Twitter post the Musk acquisition puts it on a different level altogether.
Twitter’s Advertiser Exodus
To put all the issues surrounding Twitter in perspective, let’s address the question of brands leaving the platform.
Has there been an exodus of influential advertisers from Twitter? The answer is yes. Since the acquisition, around 60% of the platform’s top 1000 advertisers have pulled out. These 625 brands were among the top advertisers on Twitter.
They include Disney, Coca-Cola, Merck, Jeep, Meta, Kellogg’s, Wells Fargo, and Unilever among other heavyweights. These firms have well-entrenched marketing teams that can easily measure the credibility of a platform and where it’s headed in the medium and long term.
And clearly, they don’t like what they see.
Some firms including Chipotle Mexican Grill, Chevrolet, Ford, and others stated that they’re pausing their advertising on Twitter for the time being. But others have clarified that they would not be advertising on the platform for a more significant period.
In one of the most impactful statements to come out of the marketing community, the advertising giant Interpublic Group advised its clients to pause their advertising on Twitter.
Significant Impact on Twitter’s Revenue
When advertisers leave a platform that depends on that stream of income, revenue will be hit. That’s exactly what’s been happening at Twitter. Due to top brands leaving the platform, monthly revenue from its top 1000 advertisers dropped by a whopping 60% from October to January.
That’s a steep drop from $127 million to $48 million. The biggest drop was among its 30 largest spenders. From spending $62.5 million on Twitter, they reduced it to around $15 million.
Must has admitted that things were ‘extremely rough’ at the company and that he has had to save it from bankruptcy. He blamed the ‘massive drop in revenue’ on activist groups forcing advertisers to leave the platform.
Why Advertisers are Pulling out of Twitter
Advertisers want a social media platform to be engaging, interesting, and credible. They want their marketing messages to be shared in safe spaces devoid of extremist arguments and toxic views. Unfortunately, according to activist groups, that hasn’t been the case for Twitter.
Lenient Content Moderation
Ever since Musk took over the platform, there has seen a spike in toxic content, according to some analysts. Months after taking charge, Musk revoked the ban on certain users including former President Donald Trump who had violated the platform’s rules.
Musk also got rid of a third-party content oversight group and stopped enforcement of Twitter’s Covid-19 misinformation policy.
Some advertisers aren’t comfortable with Musk’s more lenient approach to content moderation. The tech mogul reinstated certain controversial accounts, an action that wasn’t received well by activists. Advertisers fear that there will be a demonstrable increase in disinformation and hate speech due to these actions.
The last thing companies want is for their brands to appear next to toxic content. They don’t want to face questions from consumers about why they’re endorsing a platform with extremist views. They don’t want activist groups to associate them with hate speech.
The Blue Label Fiasco
To make it a subscription platform, Musk rolled out his blue initiative for users for a specific monthly fee. Unfortunately, this turned out to be nothing like he had envisaged.
Twitter’s paid verification system allowed anyone to pose as an individual or organization. This enabled users to post content under the brand name of companies. Parody accounts started impersonating organizations and for a while, it was complete chaos.
We even had a new phrase, courtesy of the new policy; blue trolls.
One such troll posed as the pharmaceutical giant Eli Lilly and tweeted that the company’s insulin would be free. This led to a 4.37% drop in the company’s stock price, wiping billions off the company’s value.
After all the criticism it received, Twitter had to make some changes. But a lot of these were haphazard. Although he vowed to remove the legacy verification labels of celebrities who wouldn’t pay the subscription fee, he had to give complimentary verifications to several high-profile users.
Undermining Editorial Independence
A social media platform’s credibility can be measured by the trust leading media organizations have in it. And on that front, Musk’s Twitter hasn’t been doing a stellar job.
The platform took away the blue mark of The New York Times after the publication refused to pay the subscription fee. Twitter made what can be described as arbitrary changes to certain media handles including those of NPR, CBC, and BBC. The platform labeled them as ‘government-funded.’
CBC countered by saying that the public funding it receives is through a parliamentary appropriation that all MPs vote. The organization also stressed its editorial independence. Twitter later changed CBC’s label to ’69% government-funded’ before dropping these tags entirely.
These capricious policy changes reduce the trust these media houses have in the platform. We’ve noticed a reduction in the number of tweets from public organizations, which decreases the overall engagement of the platform. NPR even decided to shut down its accounts.
Twitter famously laid off around 3,700 employees or half of its workforce in November 2022. There were plans to lay off at least 200 employees early this year. These were part of Musk’s plan to get rid of excess resources and reduce the company’s expenses.
But these mass layoffs and the closure of one of its data centers have had some unavoidable impacts on the platform’s revenue. That’s because Musk terminated most of the platform’s sales teams.
These individuals were responsible for managing Twitter’s biggest advertisers and with their overnight departure, there was confusion. Advertisers need stability at the personnel level for sustainable relationships. When there’s a drastic reduction in client service personnel, they wouldn’t be comfortable spending on the platform. That’s exactly what happened.
There was another problem. Considering Twitter’s dependency on advertising revenues, the company had to enhance its advertising products. But the layoffs removed around 50 data scientists and engineers working on those products.
Without innovative solutions tailored to the specific needs of advertisers, Twitter is finding it difficult to attract marketers.
And Now, The View Limit
On July 1, Musk announced that to avoid data scraping and system manipulation, there will be a temporary limit on the number of posts a user can view per day. For verified accounts, it was 8,000 posts while unverified accounts had a limit of 800 posts. For new unverified accounts, the limit was 400 posts per day.
Later, Musk raised the limits to 10,000, 1,000, and 500 respectively. While earlier people could view posts and public profiles without a Twitter account, from now on, they will have to log in to view those.
These limitations are to prevent artificial intelligence (AI) firms from freely accessing Twitter’s content to boost their systems. Twitter isn’t alone in resisting the reach of AI firms. Reddit made plans to monetize its content, which is a massive mine for AI firms.
So, while it’s a problem that multiple companies face, the timing is particularly bad for Twitter. Since the platform needs views and engagements to lure advertisers, such limits, however temporary, can impact the number of ad impressions.
When Twitter is desperately trying to improve its revenue, these limits make it difficult for the sales team at the company to take advertisers into confidence.
More and more political
One of the biggest problems of Twitter, especially under the Musk era, is how political the platform has become. While it was always the domain of newsmakers and celebrities, Twitter has of late become too concentrated on political debates.
Political trends on the platform can be extremely divisive and polarizing. That’s not the ideal environment an advertiser wants. With partisan bickering and finger-pointing, it’s not the space for deeper and positive engagements.
It’s also not a platform where an advertiser can hope to build a sustainable community as they can on Instagram or Facebook.
If it’s not political, what excites Twitter are Musk-specific news and discussions. These can easily overlay into the political realm and generate tiring drama. The other trending topics such as BTS are also not interesting for advertisers. Amidst all this relentless chaos, brands end up being white noise in the background.
And let’s not forget, with the 2024 elections looming on the horizon, things will only get more political, heated, and alienating.
Can Twitter get back on track and engage both users and advertisers? Maybe. But if the current evidence is anything to go by, that will be a huge challenge. For brands, it makes sense to explore other platforms that are more inviting and credible.