According to Elon Musk, Twitter’s advertising revenue is booming. “Almost all the advertisers have come back,” he said recently, adding that the business could soon become profitable.
However, Twitter earned $88 million in US revenue in the five weeks from April 1 through the first week of May, down 59% from 2022, according to an internal report obtained by The New York Times. Additionally, Twitter has consistently missed its weekly U.S. sales targets, sometimes by as much as 30%, according to the document.
Sales are unlikely to improve anytime soon, according to the documents and seven current and former Twitter employees.
Twitter ad sellers fear advertisers will be scared off by the rise in hate speech and pornography, as well as the surge in ads for online gambling and cannabis products. One of the documents predicts a 56% drop in advertising revenue in the United States this month compared to 2022.
Those are the problems ahead of Linda Yaccarino, an NBCUniversal executive who Musk named Twitter CEO last month. She was to take office on Monday, said four people familiar with the situation.
Neither Ms. Yaccarino nor Mr. Musk wished to be interviewed for this article.
Advertising is crucial for Twitter: it has long accounted for 90% of its revenue. After paying $44 billion for Twitter, Mr. Musk pledged to make it “the most respected advertising platform.” But he immediately alienated advertisers by firing key business executives, spreading conspiracy theories on the site and restoring access to Twitter users who had been banned.
Several advertising agencies and major brands, including General Motors and Volkswagen, then stopped advertising on Twitter. According to Musk, Twitter is heading for sales of $3 billion in 2023 (up from $5.1 billion in 2021).
The value of Twitter is plummeting. In March, Mr Musk said it was worth 20 billion, less than 50% of the 44 billion he paid. Last week, mutual fund giant Fidelity – which kept shares of Twitter when Mr Musk shut down the capital – valued the company at $15 billion.
Twitter seems increasingly “unpredictable and chaotic,” says Jason Kint, CEO of Digital Content Next, an association of publishers. “Advertisers want to broadcast in a comfortable environment where they can send a signal about their brand,” he added.
Some of Twitter’s biggest advertisers — including Apple, Amazon and Disney — spent less money on it than they did last year, three former and current employees said. According to them, large banner ads are often vacant. These prime spaces can cost US$500,000 for 24 hours and are normally purchased by major brands to promote events, shows or movies.
Twitter has also had issues with big advertisers like Disney. In April, Twitter mistakenly awarded a gold check mark – meant to authenticate a paying advertiser – to @DisneyJuniorUK, an anonymous account that parodies Disney, often in vulgar or racial terms. That led Disney officials to demand an explanation from Twitter and assurances that it wouldn’t happen again, two people with knowledge of the situation said.
Disney, Apple and Amazon declined to comment.
According to six ad agency executives who have worked with Twitter, their clients continue to limit their spending on the platform. They point to confusion surrounding the changes made by Mr. Musk, the inconsistent support provided by Twitter, and concern over the continued presence of misleading and toxic content on the platform.
So last month, an image appearing to show an explosion near the Pentagon – which artificial intelligence experts have identified as a synthetically generated image – was shared by dozens of Twitter accounts and briefly sent the stock market plummeting.
Mr. Musk’s tweets are also cause for concern. Last month, he posted several posts comparing billionaire George Soros, a frequent target of conspiracy theorists, to comic book villain Magneto. Ted Deutch, executive director of the American Jewish Committee, remarked that Soros and Magneto are Holocaust survivors and that “the lie that Jews want to destroy civilization has led to the persecution of Jewish people for centuries.”
He denounced Mr. Musk’s misguided remarks.
Twitter is exploring ways to make it easier to buy advertising on the platform and is testing an automated system overseas to complete contracts, two people with knowledge of the initiative said.
The company is seeing growth in advertising in areas that were once avoided or banned, such as online gambling and cannabis products. In one week last month, four of Twitter’s top ten U.S. advertisers were online gaming and sports betting companies, according to an internal document. Twitter now allows advertising for cannabis accessories (water pipes, vaporizers and rolling papers) and erectile dysfunction solutions, according to internal emails.
Adult content is now a concern for the company’s sellers. When employees solicited advertisers for Mother’s Day, they found that sponsored search terms brought up pornographic videos, say two people with knowledge of the situation.
Faced with these problems, some advertisers are betting on Linda Yaccarino. Dave Campanelli, director of investments at Horizon Media, says he hopes for an improvement upon taking office: Agencies like his have struggled to stay in touch with Twitter since Mr. Musk arrived last fall.
“With Linda, that could change completely,” he says.
But for Ms. Yaccarino, her temperamental boss and volatile environment will be a challenge, he adds.
“It’s a big order,” Mr. Campanelli said.