Twitter’s advertising losses are piling up
Revenues are in free fall, employees say. Can Musk turn the tide?
On Monday morning, a revenue analyst for Twitter in Europe shared some disheartening news. “We are seeing a significant decline in bookings,” the analyst posted in Slack, before sharing the numbers. Twitter’s ad revenue in Europe, the Middle East and Africa (EMEA) is down 15 percent year over year, he said, and weekly bookings are down 49 percent, according to screenshots shared with Platformer.
It was a grim update to an already dire set of forecasts. On October 31, in a Google Sheet created to track advertisers who had paused their campaigns amidst Elon Musk’s chaotic takeover of the company, analysts found that $15.7 million in EMEA revenue was already at risk. That included $12 million of anticipated losses in the United Kingdom, the company’s largest market in the region.
The losses come at a critical period for Twitter, which has been counting on the confluence of Black Friday, Cyber Monday, and the ongoing World Cup to drive increases in quarterly revenue. “It’s catastrophic,” one former Twitter executive told us.
The scale of total losses to date in Twitter's largest market, the United States, could not be learned.
But on November 22 alone, brands associated with WPP Group, one of the world’s largest advertising companies, paused active campaigns in EMEA, Japan, and South Korea totaling $1.16 million, according to documents obtained by Platformer. In the US and Canada that same day, WPP brands paused active campaigns totaling roughly $560,000 (one industry insider explained that US brands reacted more quickly to Twitter’s botched launch of Twitter Blue, pausing many campaigns before November 22).
Many advertisers use Twitter to promote specific campaigns rather than run general brand-awareness ads. That makes it hard to predict the long-term fallout of the current advertiser pause — if Twitter stabilizes, and advertisers have new campaigns they want to run there, the current crisis could end.
But that’s a big if — and it’s unclear what Musk might do if that doesn’t play out. Twitter derived 89 percent of its revenue from advertising last year, and while Musk has a long-term plan to generate half of revenue from subscriptions, that milestone is currently little more than a dream.
The company’s first effort to promote subscriptions, a product that let anyone obtain a verification badge for $8, led to so much harmful brand impersonation that several big advertisers paused spending almost immediately. At this point, Twitter would need one in four active users to subscribe to Twitter Blue to replace its lost advertising revenue, according to a Forbes estimate.
Musk had planned to relaunch Twitter Blue as soon as today. But the project has been delayed as Twitter tries to avoid paying the 30 percent fee that Apple charges developers for in-app purchases, Platformer has learned. As a result, the company does not plan to offer Blue as an in-app purchase when the feature relaunches.
“Product requirement updates: Will delay launch of Twitter Blue to make some tweaks,” wrote a product manager in Slack on Tuesday, before detailing the changes that needed to be made. Among them: requiring users to verify their phone numbers on Twitter’s website, increasing the listed price of $7.99 to $8, and updating various marketing and help pages.
Musk has been able to dramatically reduce Twitter’s costs through layoffs and terminations, which remain ongoing. Ever since taking over, though, he has also warned that the company could go bankrupt. This week, Ben Thompson estimated that Twitter’s annual costs are now around $3 billion, plus $1 billion in interest payments to the banks that funded Musk’s $44 billion acquisition. Last year, Twitter had about $5 billion in revenue — enough to cover the costs of Twitter 2.0.
With ad revenue plunging by 50 percent a week or more across the company’s biggest markets, though, those numbers may no longer pencil out. And rather than work to stop the bleeding, Musk appears to be actively encouraging it.
He’s personally calling CEOs who have pulled back their spending to “berate” them, according to the Financial Times (screenshots obtained by Platformer suggest he also called “10 of the biggest CMOs in the US,” which one employee hailed as a “huge positive for us and his commitment.” He has publicly mused that Apple, Twitter’s single biggest brand advertiser, may “hate free speech in America” after it paused most of its campaigns.
And he moved forward with a plan to re-platform some 62,000 accounts that Twitter had previously banned for violating its rules, including 75 with more than 1 million followers, based on the results of a Twitter poll.
None of these problems are necessarily insurmountable. One ad exec told the FT that Musk might be able to improve Twitter’s fortunes by appointing a new CEO who had credibility with advertisers.
For the moment, though, the company looks to be in free fall. And rather than pull the parachute, the company’s CEO appears to be poking new holes in it.
Governing
Google gave investigators geofence location data for more than 5,000 phones as part of the FBI’s investigation into the January 6 attack on the US Capitol. (Mark Harris / Wired)
Google is storing search data for abortion-related services for weeks, despite promising that it would delete this data after Roe v, Wade was overturned, researchers say. (Johana Bhuiyan / The Guardian)
The UK competition regulator found music streaming services have led to more competition, not less, for listeners and musicians and has ruled out further action to help artists earn more money. (Kate Beioley / Financial Times)
Trump is not backing down from his legal fight against Twitter for banning him, despite having his account reinstated. A final ruling in the case could set an important precedent on the power that tech companies have to deactivate users who violate their rules. (Malathi Nayak / Bloomberg)
Twitter has just one employee left whose job it is to police child sexual exploitation material across Japan and the Asia Pacific region, despite Elon Musk claiming this is a top priority for the company. (Morgan Meaker / Wired)
Twitter is no longer going to enforce its Covid misinformation policy. (Donie O'Sullivan / CNN)
Britain will not force tech giants to remove content that is "legal but harmful" under its Online Safety Bill, after lawmakers raised concerns that the move could harm free speech. (Paul Sandle / Reuters)
Industry
Sam Bankman-Fried clung to power even as FTX crumbled and the company’s lawyers begged him to step aside, new documents show. (David Yaffe-Bellany / New York Times)
Big tech companies are swooping in to hire Twitter’s laid off misinformation experts. Good! (Tiffany Hsu / New York Times)
Elon Musk’s hardcore working environment at Twitter, which many tech CEOs are trying to mimic, isn’t good for performance, science shows. (Arianna Huffington / The Information)
Evan Spiegel told Snap employees that he expects them to be in the office 80 percent of the time starting in February. (Alex Barinka / Bloomberg)
Cyber Monday pulled in $11.3 billion in e-commerce sales — 5.8 percent more than consumers spent on the same day last year. (Ingrid Lunden / TechCrunch)
Google licensed its AI research model to a med tech company for breast cancer screening. (Justine Calma / The Verge)
Amazon is jumping into the AI generated art world with Create with Alexa, which lets children create animated stories using kid-friendly prompts. (Will Shanklin / Engadget)
Those good tweets
Talk to us
Send us tips, comments, questions, and Twitter ad revenue projections: casey@platformer.news and zoe@platformer.news.
Twitter’s advertising losses are piling up
Looks like the new majority owner/CEO is confused about who the dogs are (advertisers on one side, infrastructure - i.e., Apple on another) and who precisely is the dog's tail (Twitter & its new majority owner/CEO).
Kinda crazy how much Twitter seems to be run more like a magazine with its ad sales biz than a social platform.