Twitter reported that its advertising sales in the United States were down 59% from last year, even with Elon Musk stating that the social platform is breaking even. Several major advertisers have left following Musk’s takeover.
According to the released financial details, Twitter made $88 million in American-based advertising sales in April. Early estimates suggest revenues are down 56% for May 2023 compared to last year.
In total, global advertising revenue in 2023 is estimated to be 28% less than it was in 2022. That figure represents a deficit of $3 billion. Twitter’s top 50 advertisers have spent significantly less since October 2022.
Musk’s Decisions Are Cited as the Reason Behind Advertiser Pullback
About a month after Musk purchased Twitter for $44 billion, half of the platform’s top 100 advertisers announced plans to withdraw or had already stopped their ads. This issue persisted in the months that followed, with revenue dropping 20% in this area in year-over-year statistics.
Although some changes could be politically motivated, Musk also spent this time testing a broad range of updates to Twitter. That included re-administering accounts that had been banned, laying off staff, and starting subscriptions for verified badges.
According to staff reports from Twitter, some advertisers were bothered by the rise in hate speech that occurred on this platform during those experimental times. Companies didn’t want their branding to be next to controversial posts.
Musk choosing Linda Yaccarino to be the new CEO of Twitter is a sign that successful advertising is the key to developing a more profitable platform
Losing Advertising Executives May Cause Ongoing Concerns
Musk told the BBC in April that almost all the advertisers that left when he came into the company had returned or intended to do so.
Twitter lost two top executives in charge of content development and advertising. One of those individuals, Ella Irwin, told reporters that her exit was partially due to how the platform handled a movie that discussed gender issues.
The other executive was the head of ad quality and brand safety, resigning from the position soon after Irwin left.
Musk tweeted in response that the only limit on controversial content would be that it would not be placed next to any advertising.
Despite the changes and promises, Twitter regularly falls short of its weekly sales goals by up to 30%. Internal documents indicate this trend is expected to continue with no end in sight.
“Say what you want about me, but I acquired the world’s largest non-profit for $44 billion,” Musk tweeted.
At the heart of the issue is society’s trend toward hardliners. If a company is seen as supporting one side over another, they stand to lose customer support from those on the other side of the conversation. Since Twitter conversations tend to skew in one way or another, it is difficult for some brands to find the middle ground.
If Musk can find a place with balance, the ad sales trend could reverse. Otherwise, expect the advertising revenue drop to continue.