It’s been a pretty wild couple weeks in the ad-supported digital media business, and unlike most of what happens in this business, they’re things I can actually talk about outside of work without risking putting anyone to sleep. There are always 30,000 things going on on the business side of the internet – and while a lot of them feel urgent, they usually move pretty slowly, and most people outside of the industry don’t even need to notice them happening.
But with Elon Musk buying Twitter and a ton of big-money advertisers pausing their spending on the platform – this is different. The platform, its owner, the advertiser brands are all recognizable entities, and they seem to be doing things incredibly quickly. It’s very rare for a story about the business side of the digital media business to make front-page headlines. My day job is *~*developing content*~* for advertising technology companies, and people who do this kinda stuff for a living generally understand we can’t talk about it at parties. It’s more than most people really want or need to know about the back end of the internet. But while the general-interest coverage of the internet often focuses on relatively abstract things like civility, the tone of content on social platforms and in other media, this Twitter stuff shines a light on the path that leads from tone directly to dollars. And if you think there are a lot of words devoted to this stuff in general-interest media, you should see the ad industry trade publications. They’re popping off, because Musk just can’t stop doing things that are bad for Twitter’s ad business.
There are a lot of updates that seem to flit by like side notes in the general-interest narrative, but are truly BFDs in the ad-supported media biz – and a lot of those storylines deserve to be explained in slightly more detail than general-interest news outlets generally explain them. So I wanted to take a minute to dig into some of those elements that are already impacting Twitter’s ad business. [In reality, this’ll take more than a minute, because there’s just too much. – ed.] The impact is not hypothetical, it’s not a future thing, it’s here now, and it likely will be for some time.
Before we get into it, there are the numbers. Twitter’s prominence in media and society is out of whack with the actual size of its user base. Twitter isn’t prominent because everyone is on it. Twitter is prominent because a lot of prominent people are on it. People whose statements get widely quoted and reported pretty much anywhere they make them – Twitter just makes it really easy to repost those statements. Facebook, YouTube, Instagram, TikTok, Snapchat, and Telegram all have more monthly active users than Twitter – and beyond that, 90% of the content on Twitter comes from 10% of its users. Twitter is basically full of rubberneckers, people who are there out of curiosity or perceived necessity. A town square of any kind it ain’t.
And around 90% of Twitter’s revenue comes from advertising. Twitter needs either ad revenue, or a viable alternative revenue strategy. It doesn’t have the latter.
You might think it’s a two-way street between advertisers and social platforms, though. Don’t advertisers need a leading platform’s audience as much as the platform needs their spending? Well, yes and no, but more no than you might expect. Remember that high-profile advertiser boycott of Facebook in 2021, over misinformation and hate speech on the platform? And remember how it was pretty short, and advertisers returned? The difference is that advertisers can’t not buy on Facebook. There are like, 1 billion users on there. It doesn’t matter whether or not a brand likes advertising on Facebook; they feel like they have to be there, and if they’re not, their competitors will be. Twitter simply does not have that leverage.
Twitter is one of those places on the internet that have always been a bit tricky for advertisers, because it’s full of content users themselves produce, which is very unpredictable, as opposed to professionally-made content, which is broadly pretty predictable. Meanwhile, Musk is behaving improvisationally in his approach to advertisers who definitely do not improvise much of anything that matters. Normally there would be high-level executives at Twitter who would say to advertisers, “Hey, I know things look really crazy right now, but don’t worry, and here’s why you shouldn’t worry so much.” But most of those people have resigned or been fired. Advertisers just don’t know who to bring their concerns to anymore, and who might actually listen to them.
So here’s how he’s been shooting himself in the foot over and over, and why he does not have the bandwidth/leverage/financial safety cushion to do that.
- Even before he officially bought Twitter, advertisers were wary of a Musk-led Twitter, because they anticipated he wouldn’t value their business. He’s stated in the past, repeatedly, that he doesn’t like advertising. His statements also signaled that this guy who would be heading an ad-supported business didn’t understand the advertising industry. In the ad-supported media business, saying you hate advertising isn’t even a take. Everyone hates advertising. That’s barely hyperbole. Even the ad industry is chock full of people who hate advertising. Marketers sometimes talk about “advertising as a service,” but you have to watch out for people who say that and actually believe it. They are unbalanced people and you probably don’t want to have one of them for a manager.
- Brand safety has been an issue for ages, and advertisers are obliged to act in accordance with their established, codified brand safety policies. I was being asked to write about brand safety on YouTube in 2014. That was eight years ago. Advertisers care deeply about aligning their ads with content that casts their brand in a positive or at least neutral light, and they’ve been pushing their cause forever. They don’t like to be next to misinformation or hate speech or even bad news, because they want users/consumers to form positive associations with their brand. Most aren’t trying to get people to click on ads and buy stuff immediately, because almost no human being does that, it’s not a practical goal for most brands, and the brands who do want that fare better on Facebook. What advertisers tend to want is to be liked. They run studies to measure whether they’re liked, and what they’re specifically liked for. And they buy ad space based in part by what content will make consumers like them for the reasons they want to be liked. Musk is blaming “activists” for influencing advertisers, and while activist groups did indeed speak with advertisers about their concerns with Musk’s leadership after he took over Twitter, advertisers didn’t need that nudge. The thing a business is supposed to do with its policies is to follow them.
- Musk is signaling to Twitter users that the platform’s advertisers have an agenda. This implies that these advertisers are not trustworthy. This is the exact opposite of what advertisers want to communicate. It doesn’t make sense for advertisers to spend money on a site or platform where the person who straight-up owns the site is continually undermining the message they’re paying gobs of money to send. And if they presume Musk is intentionally aiming to deceive their target consumers about their motivations, that will even further damage any business relationship they may have in the future. As Peter Kafka at Vox explained (and it’s edifying to see Kafka had a lot of the same takeaways I do), you can’t expect to get very far by threatening your business partners, especially when they’re the ones paying you.
- The kinds of advertisers who generally have relatively lax brand safety standards (that is, lax by 2022 norms) are already pausing their Twitter spend. In the digital media industry, during a conversation about brand safety protocol, one person will often say something like, “There are always going to be advertisers who are less focused on this stuff, because they’ll say, ‘Well, even neo-nazis need to wipe their asses and brush their teeth.’” What that means is, there are always going to be advertisers – industry people often cite CPGs (consumer packaged goods brands) – whose target audience is potentially everyone alive. They’re selling food in a box. They’re selling paper towels. They’re selling cold medicine. Their advertising rarely needs to communicate the brand’s socio-cultural values. And those kinds of advertisers have hit the pause button on Twitter. We’re talking Mondelez. Pfizer. General Motors. IPG and Omnicom, two of the four largest ad agency holding companies in the world, both recommended their clients all pause Twitter spend – and those clients are like, 40 quadrillion household-name brands. For the sake of context, this shit is not normal.
- Musk doesn’t seem to understand what metrics advertisers consider meaningful. The other day, he claimed that Twitter has seen growth in monetizable daily active users since he took over Twitter. This is a meaningful metric, because it shows how many users are engaged deeply enough with the platform to see ads. But it’s meaningful only if it’s verifiable, and advertisers don’t love it when platforms grade their own homework like this. Anyway, he took over Twitter two weeks ago. That’s nothing. It’s not a trend. Advertisers like trends. And they like to know what’s driving those trends. Trends help advertisers decide what’s a gamble and what’s a safe bet. The trend has been that heavy tweeters have been tweeting less, and that trend has been ongoing since the beginning of the covid pandemic, two and a half years ago. What’s more, there’s been a decline in tweets about entertainment and sports, which is generally considered brand-safe and desirable content for advertisers. And if you’re seeing a spike in users rubbernecking on content that may fall on the wrong side of advertisers’ brand safety policies – then you know how to finish this sentence.
- This is all going on while advertisers are planning their Q1 ad buys. This is three months of spend, which under normal circumstances should have been fairly reliable (and these already weren’t normal circumstances – advertisers also have had to strategize for how inflation and other economic factors may influence consumer behavior in coming months), and now is in flux. Keep in mind the most lucrative time for Twitter’s ad business is around the Super Bowl, and that happens in Q1.
The idea that advertisers are behaving in a way that is political or whimsical or even unprecedented is pretty much bunk (although you can’t rule out any motivations universally). This is like, the third big-time brand safety-related ad pause we’ve seen in the last two and a half years. We talked about the Facebook ad boycott in 2020, which got a ton of press. But, less prominent in the general-interest news cycle at the time, there was also a huge pause of ad spend at the beginning of the covid pandemic. Nothing political or personal about that one! When the pandemic started, advertisers were running or planning ad campaigns based on what they expected out of the type of content they were running ads on, and what messages they expected would resonate with consumers. But all of a sudden, all the news was bad. And advertisers had to stop and re-evaluate whether the messages they were putting forth were even the right messages for the moment anymore. There was a massive drop in ad spend almost overnight. It was a very big deal. I was hired to write literally thousands of words about it in 2020. Of course advertisers came back. What are they going to do, not advertise on the open web?
Twitter is not on the same level as Facebook or the entire open internet. Advertisers can reach the Twitter audience elsewhere on the web or on other social platforms. Musk just doesn’t have the leverage he seems to think he has. And his alternate revenue plan is to sell $8-per-month subscriptions, which is fancy crowdfunding. That and something involving data licensing, and this is maybe not the right time for that, considering how there’s been a years-long movement toward ensuring greater data privacy, led by new legislation enacted around the world and new Google and Apple policies, which is changing at a foundational level how digital advertising is done, and which has such deep and broad impact that I cannot possibly sum it up here. It’s such a big deal that writing about it paid my rent in 2021. Surely Musk has been following that, though, and knows what to do about it, or else not.
He’s promised a “thermonuclear name and shame” of advertisers that have pulled spend, presumably so his fans will know which brands to boycott, which in turn is presumably so they don’t have to go through the trouble of Googling “Twitter advertiser” and checking the running lists being compiled by a large number of media outlets. This will be terribly important for consumers to take a stand and declare Twitter means more to them than… [checks notes] macaroni and cheese.
Epilogue and Newer Developments
My professional take is that he doesn’t know what he’s talking about. I’m not trying to be snarky, and I’m not trying to say I simply disagree with him. I’m saying that when he talks about Twitter’s ad business, I don’t believe he fully understands what the words coming out of his mouth really mean, and I don’t believe he understands how the concepts attached to those words are supposed to be applied. Musk held a call a couple days ago with advertisers and advertising trade groups and several thousand other people who might have a stake in this stuff. And, my people: It was bad. He neither answered all questions properly, nor stayed on topic, nor made sense. He talked a bit about ecommerce (or I think he did? something about “sales?”), which is a different industry from advertising. He mentioned rolling out a new ad product that seems to already exist. He actually said, “We all kind of work hard to make sure that there’s not bad stuff right next to an ad.” He also said Twitter would be working on ensuring the relevance of ads. In other words, he’s telling thousands of people who know their own industry perfectly well that he wants to do brand safety by doing brand safety, and he wants to do targeting advertising by doing targeted advertising. Got it.
I don’t know a single person in the digital media business who thinks Elon Musk is on the right path. There are some who cautiously suggest he might still figure out how to make Twitter make money, and then there’s everyone else. You see a lot of Michael Jackson eating popcorn in these threads.
I take no great pleasure in the thought that Twitter might soon go away entirely, increasingly obsolescent as it is. The fact that thousands of people are losing their jobs (and that some of them may lose their work visas as a result) is absolutely awful and deeply unfair. But I don’t have a lot of optimism for its long-term future as a business. I guess what the Muskbois of the internet like to believe is that their guy’s whole thing is that he looks at the accepted way of doing things in a business and says, “How about we don’t do that?” But I really don’t think that ploy is going to work in ad-supported media. He’ll be about the 70,000th rich guy to get this business wrong.
I definitely will not be updating this post with new information as this story develops, because come on.
This really went on for longer than I’d expected. Next thing I post on this site is probably gonna have to be, like, a peanut sauce recipe or something.