What Will the Musk Buyout Mean for Twitter Advertising?

Twitter has been an interesting social media platform.  While Twitter says there are currently about 486 million account holders worldwide, their latest earnings report shows only about 238 million of those are active daily.  This is a small share compared to another popular social media platform, Facebook, with about 1.93 billion accounts active daily.  Yet the platform seems viable enough to attract the attention of the investor, Elon Musk, who purchased Twitter for $44 billion.  His substantial investment and initial changes to management and account features leave many to wonder what the Musk buyout will mean for advertisers.

How successful has advertising on Twitter been?

Even though the amount of account holders on Twitter is less than other social media platforms, people using Twitter are very engaged in communication on it.  In 2020, Twitter brought in about $3.7 billion in revenue, and 86% of that came from advertising.  

Twitter offers a few different styles of advertising than Facebook, but the overall concepts are the same.  The costs are higher on Twitter, yet companies feel their dollars may be more wisely spent.  Because the users are more engaged in the topics the ads are connected to, advertisers feel they are getting more promotions directly to people who are highly likely to have an interest in their products and services.

What is different after the Musk buyout of Twitter?

We’re only about a week or two in, so it’s too early to tell for sure.  What we do know is that Musk is very interested in earning a positive return on his investment, and that is likely to come in the way of different styles of account structures to generate more income for the bottom line.  He’s already proposed a subscription fee to have the blue “verified by Twitter” checkmark next to an account name that started at $20 but has now seemingly been reduced to $8 per month.  The outcry by users has already hit the media for those who do not support the change.

Musk has also wasted no time in making changes to the top management of the company.  The CEO, Parag Agrawal, and CFO, Ned Segal, were both terminated as soon as Musk closed the deal with Twitter.  Since then he has also terminated Vijaya Gadde, the executive in charge of Twitter’s trust, safety, legal, and public policies.  Gadde had been responsible for removing a number of political ads in the 2020 campaign and removing former President Trump’s account after the January 6 attack on the Capitol.

Both of these items are noteworthy because they will impact those who will remain using Twitter in the future.  Some users are already leaving the platform because they disagree with the changes or the new ownership.  It’s likely that others who previously left the platform in 2020 for other options may return.  

What do these changes mean for advertising?

It’s a bit of a wait-and-see moment right now.  However, we’ll need to watch the demographics of the platform to determine which products and services will be best suited for promotions on Twitter.  It’s also likely that new leadership will bring about new ideas that will change how advertising is managed.  There may be different types of advertisement options, or in the very least, new fee structures to consider.   

Recently, Musk tweeted his vision that Twitter should be the most respected advertising platform in the world.  According to Musk, “It is essential to show Twitter users advertising that is as relevant as possible to their needs.  Low relevancy ads are spam, but highly relevant ads are actually content.”

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