Linda Yaccarino today became Twitter CEO – and she’s got some hard work ahead of her. That’s because Twitter’s advertising revenue has declined 59% year on year, according to an internal presentation acquired by The New York Times.
Despite Elon Musk’s recent optimism about Twitter’s advertising progress, stating that “almost all advertisers have returned” and predicting profitability for the platform, the situation remains uncertain.
Something doesn’t add up. During the five weeks from April 1 to the first week of May, Twitter’s U.S. advertising revenue was $88 million. Twitter frequently fell short of its weekly sales forecasts, sometimes by as much as 30%, The Times reported.
Why advertisers are fleeing. A surge in hate speech and explicit content, along with an increase in advertisements for online gambling and marijuana products, caused concern.
Twitter’s U.S. ad revenue is projected to drop by at least 56% each week compared to the previous year, according to the internal document.
Twitter’s advertising sector is crucial to its success and value, accounting for 90% of its revenue.
When he acquired Twitter for $44 billion in October and privatized the company, Musk pledged to create “the most respected ad platform.” However, he soon strained relationships with advertisers by terminating key sales executives, promoting a conspiracy theory on the platform and reinstating previously banned Twitter users.
How brands reacted. Several major ad agencies and brands, including General Motors and Volkswagen, suspended their Twitter ad investments. Musk had projected that Twitter’s revenue for 2023 will reach $3 billion, a reduction from $5.1 billion in 2021 when Twitter was a publicly-traded company.
Several of Twitter’s major advertisers, such as Apple, Amazon, and Disney, have reportedly reduced their spending on the platform compared to the previous year, according to three former and current Twitter employees. They also noted that high-value banner ads on Twitter’s trends page, typically purchased by large brands for promotional purposes, are frequently remaining unsold.
Twitter has faced public relations issues with major advertisers, including Disney. In April, Twitter mistakenly gave a gold checkmark, indicating a paying advertiser, to an unaffiliated account called @DisneyJuniorUK. The account then posted offensive content, causing Disney to demand an explanation and assurances from Twitter to prevent such errors in the future.
Why we care. Despite its challenges, Twitter is still a powerful platform that reaches a vast, global audience. The platform still has a user base of millions who engage daily, offering unique opportunities for brand visibility and interaction.
Changes are starting. Yaccarino, the NBCUniversal executive recently appointed as Twitter’s CEO by Musk, is inheriting several challenges. She has taken over as CEO today – weeks earlier than expected, BBC reported.
Damage done? The new leadership under Yaccarino could signal upcoming changes in their approach to problematic content, potentially improving the advertising environment. Twitter has also added Joe Benarroch, formerly NBCUniversal’s senior vice president of communications, advertising and partnerships.
Advertisers should watch Twitter’s changes, as it may continue to be a potential key player in digital marketing strategies.