Elon Musk recently said that Twitter’s advertising business was on the rise. “Almost all advertisers have come back,” he claimed, adding that the social media company could soon become profitable.
But Twitter’s US ad revenue for the five weeks from April 1 to the first week of May was $88 million, down 59 percent from a year earlier, according to an internal presentation obtained by The New York Times. The company regularly underperformed weekly U.S. sales forecasts, sometimes by as much as 30 percent, the document said.
That performance isn’t likely to improve any time soon, according to the documents and seven current and former Twitter employees.
Twitter’s ad vendors are concerned that advertisers could be spooked by an increase in hate speech and pornography on the social network, as well as more ads featuring online gambling and marijuana products, the people said. The company predicts ad revenue in the US will drop at least 56 percent a week this month compared to a year ago, according to an internal document.
These issues will soon be inherited by Linda Yaccarino, the NBCUniversal executive who Mr. Musk named Twitter CEO last month. She is expected to begin work on Monday, four people familiar with the situation said.
Ms Yaccarino declined to comment through a spokesperson. Mr Musk did not respond to a request for comment.
The state of Twitter’s advertising is critical because ads have long made up 90 percent of the company’s revenue. After Mr. Musk bought Twitter for $44 billion in October and took the company private, he vowed to “the most respected advertising platform.” But he soon alienated advertisers by firing key sales executives, spreading a conspiracy theory on the site and welcoming back banned Twitter users.
In response, several major advertising agencies and brands, including General Motors and Volkswagen, halted their advertising spend on Twitter. Mr Musk has said Twitter is on track to post $3 billion in revenue by 2023, up from $5.1 billion in 2021 when it was a public company.
Twitter’s valuation has plummeted since then. In March, Mr. Musk said the company was worth $20 billion, more than 50 percent less than the $44 billion he paid for it. Last week, investment giant Fidelity, which owns stock in Twitter, valued the company at $15 billion.
Twitter is feeling increasingly “unpredictable and chaotic,” said Jason Kint, CEO of Digital Content Next, an association for premium publishers. “Advertisers want to work in an environment where they feel comfortable and can send a message about their brand,” he added.
Some of Twitter’s biggest advertisers — including Apple, Amazon and Disney — have spent less on the platform than they did last year, three former and current Twitter employees said. Large specialized “banner” ads on Twitter’s trend page, which can cost $500,000 for 24 hours and are almost always bought by big brands to promote events, shows or movies, often go blank, they said.
Twitter has also run into public relations sniffles with major advertisers like Disney. In April, Twitter mistakenly gave a gold check mark – a badge intended to indicate a paying advertiser – to the @DisneyJuniorUK account, which does not belong to Disney. The account posted racial slurs, leading Disney officials to demand an explanation from Twitter and assurances it wouldn’t happen again, two said people with knowledge of the situation.
Disney, Apple and Amazon declined to comment.
Six ad agency executives who have worked with Twitter said their clients continued to limit spending on the platform. They cited confusion over Mr Musk’s changes to the service, inconsistent support from Twitter and concerns over the continued presence of misleading and toxic content on the platform.
Last month, for instance, a photo that appeared to show an explosion near the Pentagon — which artificial intelligence experts identified as a synthetically generated image — was shared by dozens of Twitter accounts and briefly sent the stock market tumbling.
Some advertisers also continue to be concerned about Mr. Musk’s tweets. Last month, he posted several times comparing billionaire financier George Soros, a frequent target for conspiracy theorists, to “X-Men” comic book villain Magneto. Ted Deutch, the chief executive of the American Jewish Committee, noted that both Mr. 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.”
“Musk should know better,” he said.
Last week, Ella Irwin, Twitter’s head of trust and safety, the division that oversees content moderation, and AJ Brown, the head of brand safety and ad quality, resigned, three current and former employees said. Mrs. Irwin and Mr. Brown did not respond to requests for comment.
mr. Musk has been promoting new tools, known as adjacency controls, to allow advertisers to keep their ads away from tweets containing specific keywords or messages from certain users. Some advertisers are using the tools to keep their content away from Mr. Musk’s tweets, four people familiar with the situation said.
Still, some marketers are returning to the platform. GroupM, a media buying organization that is part of the advertising giant WPP, informed employees in May that it was removing its “high risk” flag on Twitter and guiding customers to return to business as usual at their discretion, two well-known people with that decision. IPG, another major advertising company, has advised customers to proceed with caution when using Twitter after suggesting that they temporarily pause their spending last fall.
Twitter is exploring ways to make it easier for advertisers to buy space on the platform by testing an automated system outside the United States to close deals, two people familiar with the scheme said. Insider previously reported the move.
The company is experiencing a growth in advertising in areas it once shied away from or was banned from, including online gambling and marijuana products. In a week last month, four of Twitter’s top 10 US advertisers were online gambling and fantasy sports betting companies, according to a presentation. Twitter has also begun allowing ads for cannabis accessories, including “bongs, vapes, rolling papers,” as well as erectile dysfunction products and services, according to internal emails.
Adult content, which is allowed on Twitter, has become a concern among the company’s sales staff. When some employees tried to pique advertisers’ interest in Mother’s Day, they found that potential sponsored search terms, such as “MomLife,” turned up pornographic videos, according to two people familiar with the conversations.
These are problems that some advertisers hope Ms. Yaccarino will solve.
Dave Campanelli, Horizon Media’s chief investment officer, said he hoped for a change after Ms Yaccarino started, as media agencies like his struggled to keep in touch with Twitter last fall after Mr Musk arrived.
“For a while we didn’t even know who to call and talk to,” he said. “With Linda coming in, that could change that in a big way.”
He acknowledged that Twitter’s boisterous boss and unstable environment could pose a challenge to Ms. Yaccarino.
“It’s a tall order,” Mr. Campanelli said.
Benjamin Mullin reporting contributed.
