Twitter Tumbles – Ad Agencies Leaving The Social Media Platform
Elon Musk’s $44 billion takeover of social media giant Twitter has not been a tale full of roses, but, full of thorns. The most recent thorn to plague Twitter’s success has been advertising agencies, or lack thereof. Twitter’s ad-generated revenues, which had accounted for roughly 90% of the company’s total 2021 revenue of $5.08 billion, have been potentially thwarted by a mass exodus of ad agencies departing from their Twitter deals. Companies such as Omnicom, General Mills, Pfizer, and General Motors have paused their marketing deals with the social media company over fears of both Twitter’s finances and Musk’s plan to lessen content moderation over the platform.
These deals that have suddenly been broken or faded away account for 30% of their ad revenues, thus creating uncertainty as to whether Musk will be able to keep Twitter afloat in the current economic climate. Brand safety is a new staple that has been protected in recent years, and companies precisely dedicate their resources to advertising on the content they believe is appropriate and suitable. Furthermore, platforms such as ByteDance’s TikTok and Meta’s Instagram have become increasingly popular, prompting ad agencies to shift their funds to advertise these relatively moderated sites. For the next several months, Musk will have a difficult battle ahead of him to not only keep the leverage Twitter has on the digital ad marketplace but to entice new and former advertising executives to return to support the 16-year-old social media titan.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
