More than 3 million listeners tuned in for Elon Musk’s interview with the BBC’s James Clayton on Wednesday morning UK time. They heard the Twitter owner dodge and deflect questions on safety, claim the company’s chief executive officer was now his dog, and make frequent racist, pornographic allusions about the broadcaster’s name. So far, so Elon.
But also on the agenda was an assurance that Twitter’s advertisers were “returning” and, as a result, the company was “roughly” at breakeven. “We could be cashflow positive this quarter if things keep going well,” Musk predicted. Since Twitter is a private company, we have to take Musk’s word for it.
Insider Intelligence, the well-respected data-research group, sees a very different picture. “Many big agencies still haven’t advised clients to end their pause [on advertising with the company],” wrote analyst Jasmine Enberg. “We expect Twitter’s worldwide ad revenues to plummet by 27.9% this year as advertisers continue to pull back spending.”
Enberg noted research from digital-economy research shop Sensor Tower that said spending by Twitter’s top 10 advertisers — which include Amazon.com Inc., IBM Corp., and Coca-Cola Co. — had fallen 89% in February and March 2023 compared with the pre-Musk September to October 2022. The recently revamped paid verification service, Twitter Blue, won’t come close to making up the shortfall.
This is not necessarily all Musk’s fault, Enberg rightly points out. Twitter’s decreasing relevance for much of the population — those who don’t want a constant timeline of doom and gloom — has had advertisers hesitating for a while now. Uncivilized behavior on Twitter predated — but accelerated with — the rise of Donald Trump. Musk’s contribution has been to ultimately and inexplicably say “more of that, please,” reinstating some of the worst offenders.
“Twitter is ‘troll heaven,’” Musk said after the BBC interview, when the discussion continued on Twitter Spaces, with Musk inviting a few acolytes who were eager to chat.
One of them, Ian Miles Cheong, a right-wing social media figure, described the appeal of Twitter as thus: “When you tweet a celebrity, there’s pretty good chance they’ll read it and they get irritated by it, and then say you’re trolling them, which is what I do. It’s good, it’s fun having that reaction. It’s like playing a video game but better.”
“Yeah, totally. Exactly,” Musk agreed.
It’s the kind of sentiment typical among the excitable group of Twitter users that feel the network has become “more fun” than ever before. That may be so for some — in the same way that some find “fun” by playing music aloud on the bus or smashing up a phone box. There’s a certain crowd being cultivated by Musk on Twitter that equates obnoxious behavior with a good time.
Yet Troll Heaven — let’s call it that now? — is not the sort of place most sensible advertisers would choose to insert their brands. Instead, dollars have flowed to the more Gen Z-friendly domains of YouTube and TikTok.
A private email thread between top advertising executives, published earlier this month by news site Semafor ahead of a major industry conference next week, gave a glimpse into the fears of major brands. Tariq Hassan, chief marketing officer at McDonald’s Corp., said Musk’s ownership of Twitter “objectively can only be characterized as ranging from chaos to moments of irresponsibility.” Colgate-Palmolive Co. Vice President Diana Haussling added that she had to be “mindful of the harmful and often racist rhetoric of Elon Musk.”
Despite all this, Musk may of course be telling the truth about some advertisers coming back. A refresh of Twitter’s feed suggests as much. There are big advertisers, such as Apple Inc. and Walt Disney Co., as well as banner brands such as the UEFA Champions League and others.
What’s changed in the time Musk has come along is the proliferation of extremely low-rent or comically untargeted offerings. I was recently shown an ad promoting the sale of an agricultural-equipment company in Iowa when, unfortunately, I am far from the right audience. Others are for cheap and tacky novelty products.
Still, Musk has a point when he told the BBC: “If Disney feels comfortable advertising their children’s movies, and Apple feels comfortable advertising iPhones, those are good indicators that Twitter is a good place to advertise.”
But it was less than five months ago when Musk was using his platform to taunt Apple, asking “Do they hate free speech in America?” when it looked as though the company was pulling back its ad spend on the network.
Only a visit to Apple HQ and a sunny walk around a lake with CEO Tim Cook seemed to repair that relationship and convince the world’s richest company to stick around. Not every business is going to get that kind of one-on-one attention.
“Jump in, the water’s warm, it’s great,” Musk said to the BBC when asked if he had a message to reluctant brands. The problem is the network he seems intent on creating is one advertisers do not want. And while Musk likes to describe Twitter as the world’s biggest town square, what he has actually created is a wild playground — a place where the loudest and roughest inhabitants set the tone.
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ABOUT THE WRITER
Dave Lee is a Bloomberg technology columnist.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
