Elon Musk recently said that Twitter’s ad business was on the rise. “Almost all the advertisers have come back,” he said. he claimedadding that the social media company could soon become profitable.
But Twitter’s US ad revenue for the five weeks from April 1 through the first week of May was $88 million, down 59 percent from a year earlier, according to an internal presentation obtained by The New York Times. The company has regularly been below its weekly US sales projections, sometimes by as much as 30 percent, according to the document.
That performance is unlikely to improve any time soon, according to the documents and seven current and former Twitter employees.
Twitter’s ad sales staff is concerned that advertisers could be spooked by an increase in hate speech and pornography on the social network, as well as more ads featuring online gambling and marijuana products, the people said. . The company forecast its US advertising revenue this month to decline at least 56 percent each week compared to a year ago, according to an internal document.
These problems will soon be inherited by Linda Yaccarino, the NBCUniversal executive whom Musk named Twitter CEO last month. Work is expected to start Monday, four people familiar with the situation said.
Ms Yaccarino declined to comment through a spokesperson. Musk did not respond to a request for comment.
Twitter’s advertising status is crucial because ads have long accounted for 90 percent of the company’s revenue. After Musk bought Twitter for $44 billion in October and took the company private, he vowed to build “the most respected advertising platform.” But he quickly alienated advertisers by firing key sales executives, spreading a conspiracy theory on the site and welcoming banned Twitter users.
In response, several large ad agencies and brands, including General Motors and Volkswagen, halted their ad spend on Twitter. Mr Musk has said that Twitter was on track to post $3 billion in revenue in 2023, down from $5.1 billion in 2021, when it was a public company.
Twitter’s valuation has plummeted since then. In March, Musk said the company was worth $20 billion, 50% less than the $44 billion he paid for it. Last week, investment fund giant Fidelity, which owns shares in Twitter, valued the company at $15 billion.
Twitter is feeling increasingly “unpredictable and chaotic,” said Jason Kint, chief executive of Digital Content Next, an association of premium publishers. “Advertisers want to operate in an environment where they feel comfortable and can send a signal about their brand,” he added.
Some of Twitter’s biggest advertisers, including Apple, Amazon and Disney, have been spending less on the platform than last year, three current and former Twitter employees said. The large, niche “banner” ads on Twitter’s trending page, which can cost $500,000 for 24 hours and are almost always bought by big brands to promote events, shows or movies, often don’t fill, they said.
Twitter has also run into public relations problems with big advertisers like Disney. In April, Twitter mistakenly attached a gold checkmark, a badge meant to indicate that an advertiser is paying, to the @DisneyJuniorUK account, which is not owned by Disney. The account posted racial slurs, prompting Disney officials to demand an explanation from Twitter and assurances it wouldn’t happen again, two said people with knowledge of the situation.
Disney, Apple and Amazon declined to comment.
Six ad agency executives who have worked with Twitter said their clients continue to limit spending on the platform. They cited confusion over Mr. Musk’s changes to the service, inconsistent support from Twitter, and concerns about the persistent presence of misleading and toxic content on the platform.
Last month, for example, an image that appeared to show an explosion near the Pentagon, which artificial intelligence experts identified as a synthetically generated image, was shared by dozens of Twitter accounts and caused a brief stock market crash.
Some advertisers also remain concerned about Musk’s tweets. Last month, he posted multiple times comparing billionaire financier George Soros, a frequent target of conspiracy theorists, to “X-Men” comic book villain Magneto. Ted Deutch, executive director of the American Jewish Committee, noted that both Mr. Soros and Magneto are Holocaust survivors and that “the lie that Jews want to destroy civilization has led to the persecution of the Jewish people for centuries.”
“Musk should know better,” he said.
Last week, Ella Irwin, head of trust and safety at Twitter, the division that oversees content moderation, and AJ Brown, head of brand safety and ad quality, resigned, three current and former employees said. Ms. Irwin and Mr. Brown did not respond to requests for comment.
Musk has pioneered new tools, known as adjacency controls, so advertisers can keep their ads away from tweets containing specific keywords or posts from certain users. Some advertisers are using the tools to keep their content away from Musk’s tweets, four people familiar with the situation said.
Still, some marketers are returning to the platform. GroupM, a media buying organization that is part of ad giant WPP, told employees in May that it would remove its “high risk” flag on Twitter and guide customers back, at their discretion, to business as usual, two people familiar with the said decision. IPG, another big ad firm, has recommended that clients proceed with caution when dealing with Twitter, after suggesting last fall that they temporarily pause their spending.
Twitter is exploring ways to make it easier for advertisers to buy space on the platform, testing an automated system outside the United States for making deals, two people familiar with the deal said. Well-informed person previously reported the movement.
The company is seeing advertising growth in areas it once shunned or banned, including online gambling and marijuana products. In one week last month, four of the top 10 Twitter advertisers in the US were online gambling and fantasy sports betting companies, according to a filing. Twitter has also begun allowing ads for cannabis accessories, including “bongs, vapes, rolling papers,” as well as erectile dysfunction products and services, according to internal emails.
Adult content, which is allowed on Twitter, has become a concern among the company’s sales staff. When some employees tried to interest advertisers on Mother’s Day, they discovered that potential sponsored search terms such as “MomLife” appeared in pornographic videos, according to two people familiar with the conversations.
These are problems that some advertisers are hoping Yaccarino will solve.
Dave Campanelli, Horizon Media’s chief investment officer, said he expected a change after Yaccarino started, because media agencies like his had trouble keeping in touch with Twitter last fall after Musk’s arrival.
“For a while, we weren’t even sure who to talk to on the phone,” he said. “With the arrival of Linda, that could change that in a big way.”
He acknowledged that Twitter’s fickle boss and volatile environment could present a challenge for Ms Yaccarino.
“It is a difficult task,” Campanelli said.
Benjamin Mullin contributed reporting.