Twitter is facing a crisis in its core advertising business, as a senior manager at the company recently informed employees that daily revenue is down 40% compared to last year.
This news, first reported by The Information, comes on the heels of reports that more than 500 of Twitter’s top advertisers have ceased spending on the platform since CEO Elon Musk took over.
The continued decline of Twitter’s advertising business makes it difficult for the company to break even in 2023, as Musk previously stated it would.
Why Are Advertisers Pulling Out?
Some major advertisers have expressed disapproval of Musk’s approach to content moderation, including the reinstatement of previously banned accounts and the dismissal of the company’s key executives responsible for curtailing hate speech.
Musk also terminated most of Twitter’s sales team, including many who were in charge of the company’s major advertisers and approximately 50 engineers and data scientists working on enhancing Twitter’s advertising product.
Which Advertisers Are Pulling Out?
Notably, Omnicom and Interpublic Group ad-holding companies have recommended that their clients temporarily stop all advertising on Twitter as they wait to see what Musk will do next.
Clients of GroupM, the world’s most prominent ad-buying firm, have also reduced their spending since Musk became CEO, saying the company has become high-risk.
What Does This Mean For Twitter Users?
The issues with Twitter’s advertising business could lead Musk to make further cost-cutting measures following his previous reduction of 75% of Twitter’s 7,500 employees and the closure of one of its data centers.
This can impact Twitter’s quality of service, potentially leading to more frequent outages or a lack of new features for non-paying users.
With the limited resources Twitter has available to develop new tools, it wouldn’t be surprising to see new offerings locked behind the Twitter Blue paywall.
Also within the realm of possibility is Twitter charging for previously free features, similar to how Musk monetized verification checkmarks.
This is speculation, of course, as Twitter hasn’t made any public statements regarding its declining ad business.
It remains to be seen what Musk will do to diversify revenue.
With the company’s future at stake, the actions of Musk and Twitter will be closely watched by the industry and its investors.
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