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Marketing Ad Spend Brand Safety

Musk’s amnesty for banned Twitter users may be ‘last nail in the coffin’ for advertisers

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By Kendra Barnett | Senior Reporter

November 28, 2022 | 9 min read

With previously-suspended accounts being welcomed back on to Twitter as soon as today, industry experts suspect that the platform will continue to hemorrhage ad revenue.

Feather falling

For advertisers, this may be the feather that breaks the camel’s back / Adobe Stock

Elon Musk’s decision to grant “amnesty” to suspended Twitter accounts is the latest blow to the company’s advertising business, which previously accounted for some 90% of the platform’s revenue.

Since the billionaire Tesla chief executive took the helm at Twitter in late October – a period that’s been riddled with controversy and chaos – the social platform has lost about half of its top 100 advertisers, according to new data from not-for-profit watchdog Media Matters. Just today, Musk tweeted that Apple “has mostly stopped advertising on Twitter.”

The exodus has been largely due to concerns about brand safety and suitability brought on by fears that a Musk-helmed Twitter will take a more lax approach to content moderation, thereby inviting more hate speech and misinformation onto the platform. Many of these fears appear to be materializing in real-time: Musk laid off a large portion of the company’s content moderation team in his second week on the job; then he invited former US president Donald Trump and rapper Ye – formerly known as Kanye West – back on to the platform. Both celebrities had seen their accounts barred for violating the platform’s content policies, including rules concerning hate speech and speech that incites violence.

Now, advertisers’ fears are once again being validated: last Thursday, Musk said that he’ll be granting “amnesty” to suspended accounts, beginning this week, provided that the accounts have “not broken the law or engaged in egregious spam.” The decision came after Musk posted a poll asking Twitter users to weigh in on the matter – something he also did before choosing to reinstate the accounts of Trump and Ye.

Experts worry that this latest decision will only further repel remaining advertisers – the result of which could have dire consequences on Twitter’s bottom line.

The end of the road for advertisers?

Twitter is already bleeding advertising revenue. Top brands including General Motors, United Airlines, Audi and Mondelēz have stopped advertising on the site, and leading advertising holding companies including IPG and Havas have advised all clients to pause ad spend on Twitter.

As previously-banned users return to the platform, industry insiders suspect Twitter will only see more lost ad dollars.

“This will be the final nail in the coffin for advertisers,” says Katie Lance, a leading social media consultant. “Anyone who has been on the fence about leaving will continue to leave the platform. Many people who were suspended helped to spread false information and perpetuated baseless conspiracy theories. Twitter users are not going to want to see those folks have a megaphone again.”

Advertisers’ worries about content are already playing out: a new study conducted by the Center for Countering Digital Hate finds that Twitter witnessed an uptick in racist and antisemitic language under Musk’s leadership even before his promise to bring back banned accounts.

And it would seem that Musk needs advertisers more than they need him. Advertisers have options – as the drama continues at Twitter, they are eyeing other platforms. As Neal Schaffer, a social media marketing consultant and chief executive of social media agency PDCA Social, puts it: “Musk’s strategy seems to be one of increasing active users, but advertisers have choices, and while Twitter continues to be full of drama with no strategic direction being made to make advertisers want to advertise there, competing social networks such as TikTok continue to grow and innovate and attract more advertisers.” Others are likely to simply pocket the saved ad dollars as economic woes worsen.

Schaffer argues that “Twitter has simply lost its relevance” and that advertisers are likely to reallocate spend to “other social networks that are more attractive, have less drama and are not full of the extremists that Musk wants to allow back on his platform.”

But Musk doesn’t seem to mind ostracizing the cohort that has historically been the bulwark of the platform’s business. Since Musk rolled out Twitter’s new subscription verification plan (only to pause and then subsequently announce its re-launch), it’s become clear that Musk intends to shift the platform away from an advertising-based model and toward a subscription-based model in which users pay for premium offerings.

“Musk’s recent moves have less to do with building an advertising offering and more about bringing as many people to the platform – as users – as possible,” says Joe Pulizzi, entrepreneur, podcaster and author. “Musk probably did the calculations and figured that Twitter as a media model is not sustainable at current valuations. So he may be changing the model ... [to create an ecosystem] where more users are wanted and advertisers are not needed.”

Musk has said previously that he plans to fashion Twitter into an “everything app.”

An incentive that advertisers can’t turn down?

The decision to reinstate previously-suspended accounts could, however, prove a double-edged sword for Twitter’s advertising business.

While many experts agree that the move will create new brand safety concerns for advertisers, others point out that it could indeed help bring to fruition Musk’s goal of attracting more users – a prospect with significant implications for those same advertisers.

“If these returning accounts can drive not just existing audience engagement but also new signups and sustainable engagement month over month, perhaps [it will create] such a large potential audience that advertisers cannot refuse to work with the platform,” says Tom Telford, president of digital marketing at global marketing and communications agency Clarity.

Telford acknowledges that “clarity will be needed” regarding Twitter’s content policies and rules for reinstating formerly-suspended accounts.

Other industry leaders remain skeptical that Musk’s plan will result in a net positive for Twitter.

“If Elon is worried about Twitter’s business model and the sustainability of its revenue streams long-term, he would do better to focus less on subscriptions and more on creating a brand-safe environment where content is properly moderated,” says Ed East, chief executive officer and co-founder of global influencer agency Billion Dollar Boy.

East compares Twitter’s current brand safety issues to similar problems that YouTube faced in the past, where the platform’s video recommendation algorithm was designed to surface increasingly extreme content. The system garnered major backlash for the dangers it posed not only to users, but also to brands, whose ads inadvertently appeared on videos about fringe conspiracy theories, violence and alt-right ideologies. While YouTube was able to remedy the issue, East says that Twitter has now “fallen into the same trap.”

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Considering Musk’s decisions, East says, it’s no surprise that brands are cutting ad spend. “In the era of the savvy consumer, these brands can scarcely afford to be risking their reputations by appearing next to questionable content. Unless changes are made soon, I would expect many other brands to head for the exit door, and this could be highly damaging for Twitter.”

It’s a problem he believes could have long-term repercussions for the business. “It’s much harder to attract brands and restore their faith in a platform than to retain them. The loss of any more brands will spook investors and key stakeholders, damaging the platforms’ own reputation and its market value.”

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