Elon Musk Hates Ads. Twitter Needs Them. That May Be a Problem.

†I hate advertisingElon Musk tweeted in 2019.

Since he started pursuing his $44 Billion Purchase of Twitter – and years before that – made it clear to the world’s richest man that advertising was not a priority. He has talked about making money with Twitter in other ways, such as: some users charge to be on the site. He has also suggested that he wants to relax the service content moderation policywhich marketers say helped prevent ads from appearing alongside hate speech and misinformation.

But as Mr. Musk gets ready to take over Twitter, he may soon discover that Twitter needs Madison Avenue more than the other way around.

Ads account for about 90 percent of Twitter’s revenue. But long before the takeover of Mr. Musk, many agency leaders were lukewarm about advertising the service. They have cited a slew of complaints, including that the company can’t target ads as well as competitors like Facebook, Google, and Amazon.

Now, plenty of advertising executives say they’re willing to shift their money elsewhere, especially if Mr. Musk removes the safeguards that allowed Twitter to weed out racist rants and conspiracy theories. An exodus of advertisers would weaken the company, highlighting the difficulty in balancing Mr. Musk’s vision of Twitter as a haven for free speech with the business relationships that keep it going.

But the Twitter co-founder and at least some investors who have joined Mr. Musk’s bid have rejected the need for advertising, urging the company to break with it. Twitter’s status as “a publicly traded company that relies solely on its advertising business model” contributed to its bots, abuse and censorship issues. said Ben Horowitza general partner at the venture capital firm Andreessen Horowitz, which is investing $400 million in the effort to make Twitter private.

Jack Dorsey, the company’s co-founder, agreed. “This is true. It needs cover for a while,” Mr. Dorsey said in a tweet respond to Mr Horowitz.

Advertisers said such a shift would hurt Twitter. “Ultimately, it’s not the brands that should worry because they’re just spending their budget elsewhere — it’s Twitter that should be concerned,” said David Jones, a longtime advertising executive and the CEO of the Brandtech Group, a marketing technology company. “If you told me that TikTok was going away, it would be a disaster. But Twitter is disappearing? Whatever.”

Right after Mr. Musk struck a deal to buy Twitter early last week, the company’s executives began reaching out to advertising clients, according to regulatory records and several people who received the messages. The executives emailed assurances that business would continue as normal and lines of communication would remain open. Brand safety, they said, remained a “priority.”

Twitter representatives also noted that it would likely take months, if not more than a year, for any serious changes to take effect, advertising executives said.

Wednesday evening, during Twitter’s annual NewFronts presentation to advertisers at Pier 17 in New York, company representatives emphasized the value of Twitter for marketers: as a top destination for people to discuss important cultural moments like sporting events or the Met Gala, increasingly via video posting. Presenters pledged to help brands reach fragmented audiences, and executives repeatedly thanked advertisers and agencies for their trust and collaboration.

Musk’s impending acquisition, and what it could mean for advertisers, was not mentioned during the brief presentation.

“It’s been a quiet month on Twitter,” joked JP Maheu, Twitter’s vice president of global client solutions.

Representatives for Mr. Musk did not respond to a request for comment about his plans to advertise on Twitter. Twitter declined to comment.

Twitter is different from Facebook, whose millions of small and medium advertisers generate the bulk of the company’s revenue and rely on its massive size and targeting capabilities to reach customers. Twitter’s clientele is weighed heavily by large, mainstream companies, who tend to be wary of their ads appearing alongside problematic content.

Twitter derives the vast majority of its ad revenue from brand awareness campaigns, the effectiveness of which is much more difficult to evaluate than ads that target users based on their interests or urge an immediate response, such as a click through to a website. The company has spent years trying to make its platform a better destination for ads that drive measurable sales, and rebuilt its ad server in 2019 and 2020 to meet the demands of marketers. In March, Twitter started allowing advertisers in the United States to add store catalogs that: exhibited top products for anyone who visits their profiles.

Twitter’s reach is also smaller than many rivals, with 229 million users seeing ads, compared to 830 million users on LinkedIn and 1.96 billion daily users on Facebook. Stifel analysts recently wrote to clients that Twitter “was still considered quite a niche platform by many in the advertising industry.”

Last month Twitter said it $1.2 billion in revenue during the first three months of the year, it was up 16 percent from a year earlier, but lagging behind the growth rate the company had expected. While profitable in the quarter, the company has lost money in eight of the past ten years.

At the Chemistry ad agency, which counts health insurers and national restaurant chains among its customers, Twitter accounts for about 10 percent of the social media budget, says Jason Dille, who oversees media planning.

“Even people like LinkedIn have eclipsed the ability for us to target consumers beyond what Twitter offers,” he said. “We’re going where the results are, and with many of our clients, we haven’t seen the performance on Twitter from an advertising perspective that we have with other platforms.”

But for Mr. Dille and many others, Twitter’s attitude to content control was a bright spot. In 2019 it is all political ads banned† The company introduced warning labels about misinformation regarding elections, removed untruths about vaccines and, after the Capitol riots last year, Permanently Banned former President Donald J. Trump. Last month, in response to the war in Ukraine, the platform shut down strengthening Russian government accounts and started blocking some tweets with images of prisoners of war. Days before the deal with Mr. Musk was announced, Twitter said it would ban ads that deny climate change†

“Twitter has done a better job than many other platforms at building trust with advertisers — they’ve been more progressive, responsive, and humble in initiating ways to learn,” said Mark Read, the chief executive of WPP, one of the largest companies in the world. advertising companies. in the world.

Now, many advertisers say, while they’ll wait and see what Mr. Musk does, they fear a decade of protective scaffolding could be dismantled.

“We can safely say that if the content moderation policy changes and if there is no way to protect the brand, we will definitely recommend that our customers roll back their investments,” said Arun Kumar, the chief data and technology officer at advertising giant IPG.

Several advertising executives said they doubted Mr. Musk would consider their concerns because of his track record with the industry.

Mr. Musk, a founder of the successful electric car company Tesla and the rocket company SpaceX, does little marketing for those companies. On Twitter, he has criticized ads like “manipulate public opinion” and discussed his refusal to “pay famous people to make fake recommendation† When writing in a tweet since deleted about Twitter Blue, the recently introduced $3 per month subscription servicehe insisted on “no ads”, explaining that “the power of companies to dictate policy is vastly increased when Twitter relies on ad money to survive.”

“I don’t think he cares about the advertising experience on Twitter because advertising never interests him,” said Harry Kargman, president of mobile advertising company Kargo. “I don’t think he’s all about convincing advertisers to spend more money on the platform than what’s automated.”

Mr. Musk has suggested that Twitter focuses on subscriptions; others have proposed a pay-per-tweet model. But some ad executives hope Mr. Musk’s competitive spirit will inspire him to reset Twitter as a powerful marketing machine.

“There’s a fork in the road where Path A leads to an unfiltered place with the worst human behavior and no brand wants to come close to that,” said Brandtech’s Mr. Jones. “And path B has one of the world’s genius entrepreneurswho knows a lot about running businesses, who is unleashing a wave of innovation that people will look back on in a few years and say, ‘Remember when everyone was worried about Musk’s arrival?’”