February 21, 2024

Elon Musk recently said that Twitter’s advertising business is on the rise. “Almost all advertisers are back,” he said assertionadding that the social media company could soon be profitable.

But in the five weeks from April 1 to the first week of May, Twitter’s U.S. ad revenue was $88 million, down 59% from a year earlier, according to an internal report obtained by The New York Times. The company routinely undershot its weekly U.S. sales forecast, sometimes by as much as 30%, the filing said.

That performance is unlikely to improve anytime soon, according to the documents and seven current and former Twitter employees.

Twitter’s ad sales staff worried that advertisers might be deterred by an increase in hate speech and pornography on the social network, as well as more ads featuring online gambling and marijuana products, people familiar with the matter said. The company forecast this month that its U.S. ad revenue would drop by at least 56% on a weekly basis from a year ago, according to an internal document.

Those issues will soon be inherited by Linda Yaccarino, the NBCUniversal executive whom Musk named Twitter CEO last month. She is expected to start work on Monday, four people familiar with the matter said.

Ms Yaccarino declined to comment through a spokesman. Musk did not respond to a request for comment.

The state of Twitter’s advertising is critical because advertising has long accounted for 90% of the company’s revenue. After Mr. Musk bought Twitter in October for $44 billion and took the company private, he vowed to create a “Most Respected Advertising PlatformBut he quickly alienated advertisers by firing key sales executives, spreading conspiracy theories on the site and welcoming back banned Twitter users.

In response, several large ad agencies and brands, including General Motors and Volkswagen, paused their ad spending on Twitter. Musk has said Twitter is on track to generate $3 billion in revenue in 2023, down from $5.1 billion in 2021 when it went public.

Since then, Twitter’s valuation has plummeted. In March, Mr. Musk said the company was worth $20 billion, down more than 50% from the $44 billion he paid for it. Last week, mutual fund giant Fidelity, which owns shares in Twitter, valued the company at $15 billion.

Jason Kint, chief executive of Digital Content Next, an association of senior publishers, said Twitter felt increasingly “unpredictable and chaotic”. “Advertisers want to place their ads in an environment where they feel comfortable and where they can send a signal about their brand,” he added.

Some of Twitter’s biggest advertisers — including Apple, Amazon and Disney — are spending less on the platform than they did last year, according to three former and current Twitter employees. Large, specialized “banner” ads on Twitter trending pages cost $500,000 in 24 hours, and are almost always bought by big brands to promote events, shows or movies, often without advertising, they said.

Twitter has also encountered a PR mess with big advertisers like Disney. In April, Twitter mistakenly added a gold checkmark — a badge denoting paid advertisers — to a @DisneyJuniorUK account that Disney doesn’t own.The account posted racist comments, leading Disney officials to demand an explanation from Twitter and assurances that such incidents would not happen again. People familiar with the matter said.

Disney, Apple and Amazon declined to comment.

Six ad executives who have worked with Twitter said their clients continued to limit spending on the platform. They cited confusion over Mr. Musk’s changes to the service, inconsistent support from Twitter and concerns about persistent misleading and toxic content on the platform.

Last month, for example, a photo that appeared to show an explosion near the Pentagon — identified by artificial intelligence experts as a synthetically generated image — was shared by dozens of Twitter accounts and briefly sent the stock market tumbling.

Some advertisers also continued to worry about Mr. Musk’s tweets. In several posts last month, he compared billionaire financier George Soros, a frequent target of conspiracy theorists, to the X-Men comic villain Magneto. Ted Deutsch, chief executive of the American Jewish Committee, pointed out that Mr. Soros and Magneto are both Holocaust survivors. “The lies that Jews want to destroy civilization have led to the persecution of Jews for centuries.”

“Musk should have known better,” he said.

Last week, Twitter’s head of trust and safety, Ella Irwin, the department that oversees content moderation, and AJ Brown, head of brand safety and ad quality, resigned, three current and former employees said. Ms. Owen and Mr. Brown did not respond to requests for comment.

Mr. Musk has promoted a new tool called adjacency control, so that advertisers can steer their ads away from tweets or certain users’ posts that contain specific keywords. Some advertisers are using the tools to keep their content out of Musk’s tweets, four of the people said.

Still, some marketers are returning to the platform. GroupM, the media-buying organization affiliated with advertising giant WPP, notified employees in May that it was removing a “high risk” badge on Twitter and directing clients to return to normal business at their own discretion, two people familiar with the matter said. Another big ad firm, IPG, advised clients to exercise caution when dealing with Twitter after advising them to temporarily halt spending last fall.

Twitter is exploring ways to make it easier for advertisers to buy space on the platform, testing automated systems for transactions outside the United States, two people familiar with the matter said.insider earlier reported the move.

The company is experiencing advertising growth in areas it once shunned or banned, including online gambling and marijuana products. In one week last month, four of Twitter’s top 10 U.S. advertisers were online gambling and fantasy sportsbooks, according to a presentation. Twitter also began allowing ads for marijuana accessories, including “bongs, e-cigarettes, rolling papers,” as well as erectile dysfunction products and services, according to internal emails.

The adult content allowed on Twitter has become a concern for the company’s sales force. When some employees tried to attract advertiser interest for Mother’s Day, they found that potentially sponsored search terms, such as “MomLife,” turned up pornographic videos, according to two people familiar with the matter.

These are questions some advertisers hope Ms. Yacarino can address.

Dave Campanelli, chief investment officer at Horizon Media, said he hoped that would change under Ms. Yaccarino because it was difficult for media outlets like Musk to stay connected to Twitter when he took over last fall.

“For a while, we weren’t even sure who to call,” he said. “With Linda on board, that could change that in a big way.”

He acknowledged that Twitter’s erratic boss and changing environment could pose challenges for Ms. Yaccarino.

“It’s a tall order,” Mr Campanelli said.

benjamin mullin Contribution report.

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