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On Friday, Twitter owner Elon Musk admitted that the change of management has not been good for the company. He said: "Twitter has had a massive drop in revenue, due to activist groups pressuring advertisers, even though nothing has changed with content moderation and we did everything we could to appease the activists." What Musk was referring to is the decision by multiple brands to "pause" their Twitter ads at least until the dust settles. Companies and brands that have stopped advertising on Twitter include General Mills, General Motors, Audi, Bentley, Porsche, Pfizer, and Carlsberg. Ad buying group Interpublic Group, which works for Unilever and Coca-Cola, also urged its clients to stop advertising on Twitter to avoid reputational damage. Many activist groups are urging other companies to stop advertising on the platform as well, so there could be more desertions on tap. For completeness sake, we note that we were advertising the site on Twitter in the pre-Muskian days, but our ads there have now stopped.
Musk is probably not helped much by Joe Biden's remark on Friday that Twitter "spews lies" around the globe.
Musk has only himself to blame. When he took over, he instantly fired the top management team and set in motion plans to fire half the employees. He also posted some noxious tweets, some of which he later took down. Companies don't like to be associated with unstable company in freefall whose CEO spreads misinformation and conspiracy theories. And this is before the true hate speech and child porn hits. Musk has also acted like he doesn't care about advertising, even though that currently pays most of the bills. He recently announced a category of paid membership where for $8/mo, where a member gets a blue checkmark next to his or her tweets and a few other perks. Whether that can replace the ad revenue remains to be seen.
Musk loaded the company with so much debt when he bought it that it needs to pay $1 billion/year just to service its loans. With advertising collapsing and membership revenue uncertain, his business acumen will be sorely tested.
What Musk promised to do, but has not yet done, is to let Donald Trump back. There's isn't any time before the midterms to do that, but he could shortly thereafter. However, if Trump comes back and starts spewing lies and hate, even more advertisers may pull out, further reducing the company's revenue. The downward spiral may be hard to stop and the company could easily end up in bankruptcy. (V)