According to a report by The New York Times, Twitter has experienced a significant decline in advertising revenue, with a 59 percent drop during a five-week period between April 1st and early May, compared to the same period last year. The company consistently falls short of sales projections, and this trend is expected to continue despite the recent appointment of new CEO Linda Yaccarino, as stated by Twitter employees and documents obtained by the NYT.
Read: Samsung Galaxy S23 Ultra Review: Predictably prestigious
Previously, Elon Musk, the CEO of Tesla and a major Twitter shareholder, had predicted that the platform would generate $3 billion in revenue for 2023, down from $5.1 billion in 2021. Musk had also stated that Twitter’s value was $20 billion, significantly less than the $44 billion he had paid to acquire it.
During a recent Twitter Space session, Musk attributed the decline in advertising to European and North American advertisers who he claimed were exerting “extreme pressure” on the company, accusing them of trying to drive Twitter into bankruptcy by withdrawing their support. However, Twitter’s ad sales staff expressed concerns that advertisers have been deterred by the proliferation of hate speech, pornography, and advertisements related to online gambling and marijuana products. Under Musk’s leadership, Twitter has made controversial decisions such as firing key sales executives and reinstating banned users, leading major brands like GM and Volkswagen to pause their ad spending on the platform.
In addition to these factors, other advertisers, including Apple, Amazon, and Disney, have reportedly reduced their advertising expenditures on Twitter compared to the previous year, according to employees cited by the NYT. Large banner ads that typically promote events or new movies have gone unsold, despite their high cost of up to $500,000 for a 24-hour period. Several ad agencies have cited inconsistent support, confusion over changes, and the presence of misinformation and toxic content as reasons for limiting their ad spending on Twitter.
Advertisers are also concerned about Musk’s controversial tweets, such as one that made a comparison between billionaire George Soros and the fictional comic book character Magneto, a frequent target of anti-Semitic sentiments. The departures of key personnel responsible for safety, content moderation, and support, including Ella Irwin and Yoel Roth, have further contributed to the concerns surrounding Twitter’s advertising environment.
However, the report indicates that some major media buyers have recently advised their clients to return to Twitter. With the appointment of CEO Linda Yaccarino, it is hoped that she will focus on improving business operations and repairing relationships with advertisers while Musk concentrates on product design and new technology. Yaccarino’s presence may bring about positive changes, helping Twitter address concerns related to moderation issues, hate speech, and pornography.
While some media executives are optimistic about Yaccarino’s ability to facilitate better communication with advertisers, they acknowledge the challenges associated with the volatile environment created by Musk. Resolving these issues will likely be a significant task for Yaccarino as she takes on her new role at Twitter.
