Twitter Inc (TWTR)

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Why advertisers aren’t coming back to Twitter
By: Shirin Ghaffary | March 24, 2023

There’s no getting around it. Twitter’s survival in the coming months depends on how its new owner, Elon Musk, manages his relationship with a key group of people: advertisers.

It’s been a rocky pairing since October, when Musk officially took over and many big-name advertisers paused spending on the platform. Almost five months later, the company’s standing with the advertisers that historically make up 90 percent of its revenue still hasn’t measurably improved.

More than half of Twitter’s top 1,000 advertisers before the acquisition have stopped advertising on the platform as of February, according to data from digital marketing analysis firm Pathmatics and shared with Vox. Out of Twitter’s top 10 advertisers pre-acquisition, only six still advertise on the platform, according to the firm. That affects Twitter’s bottom line: The company’s revenue was down by 40 percent, according to a December report by the Wall Street Journal. Fewer people also appear to be visiting Twitter’s website where advertisers create ad campaigns: The number of users visiting Twitter’s advertising portal page was down 18 percent in February compared to a year before, according to data from digital intelligence firm SimilarWeb.

Vox spoke with several advertising executives, former Twitter employees, and other industry insiders who explained why Twitter’s relationship with advertisers continues to suffer.

Sources described a lack of confidence in Musk’s ability to keep his promises about stopping Twitter from turning into a “free-for-all hellscape,” high turnover in Twitter’s sales department, and confusion about the company’s policies regarding content moderation.

Chief among their concerns is a perception that Musk has turned Twitter into a place where people can post racist, sexist, or otherwise harmful speech without much consequence. Major corporations don’t want to jeopardize what they call “brand safety” by associating with offensive content. Musk has taken a lax approach to content moderation — such as allowing Neo-Nazis, white nationalists, and other controversial figures back on the platform in the name of free speech.

Companies also worry about affiliating with Musk himself as he continues to post offensive tweets, including a recent one mocking a disabled Twitter employee (Musk apologized after facing widespread backlash). Making matters worse, some advertising executives say they no longer know who to talk to about their concerns because Musk has fired or laid off many key members of Twitter’s sales and brand safety teams. All of this, insiders say, has resulted in weaker trust in Twitter among a relatively small group of people who control major ad budgets.

“Elon doesn’t understand how advertising works,” said Lou Paskalis, a longtime ad industry executive and founder of AJL Advisory, a firm that consults with brands on their marketing strategies. “I think he thinks it’s a science first and then an art, when in fact, it’s an art first and then a science.”

Twitter did not respond to repeated requests for comment. Musk, however, discussed the company’s relationship with advertisers who may be hesitant to return to the platform in an interview at a Morgan Stanley conference earlier this month.

“What I’d say to advertisers and brands is: Use Twitter for yourself and believe what you see on Twitter, not what you read in the newspapers,” said Musk. “Because what you see on Twitter is the real thing and what you read in newspapers is not.” Musk said that hate speech on Twitter is actually lower than it was before he took over and that brands worried about their reputation can choose what kind of tweets they want to run their ads next to. Several recent outside studies have found a sustained increase in hate speech such as anti-LGBTQ and antisemitic slurs in the months since Musk took over, but Twitter has said that the “reach” of hate speech, or how much it’s being seen, has decreased (which is hard to verify independently without access to Twitter’s data).

In the end, Twitter needs advertisers more than advertisers need Twitter. Compared to Facebook, YouTube, and Instagram, Twitter has a much smaller, niche user base. Brands can easily shift their advertising budgets to the bigger players in social media. Whether or not Musk can win back brands — or figure out a feasible alternate plan to make money — will determine whether the company will ultimately go bankrupt. While Musk says Twitter is close to breaking even now that he’s drastically cut costs, he warned in November of the possibility of bankruptcy, and will see that risk increase if advertisers fail to return...

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