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Elon's Ad Impact: Assessing Twitter's Ad Changes a Year into the Musk Era

Elon’s Impact: How Twitter Advertising Changed a Year into the Musk Era

In Elon Musk’s own words, he didn’t buy Twitter to make money. He did it to help humanity.

The latest move in Musk’s never-dull life sent shockwaves through the social media sphere. Millions of users logged off for the last time, Tweeps (what Twitter employees call themselves) left, and advertisers scurried away. 

After all, Musk hates ads, so why would brands stick around? 

Many of them didn’t. 

In short order, more than half of Twitter’s top 1,000 advertisers, including Coca-Cola, Jeep, Merck, and Unilever, put their Twitter budgets on hold. 

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But it’s been over a year since Elon took the reins of Twitter, and recently said that “Almost all advertisers have come back.” 

Is that the case? 

According to MediaRadar data, advertisers from 10.2k companies (up by 13% YoY) spent more than $774mm on Twitter between January 1, 2022, and May 31, 2023, representing a 2% YoY decrease. (For context: Musk reached a deal to acquire Twitter on April 25, 2022.) 

Overall, spending in Q1 2023 fell by 3% YoY to $444mm, while April and May both saw decreases of 1% YoY. 

Ad spend with Twitter graph

So what’s really up with Twitter’s ad business a year into the Musk era? 

Was it doomed from the start, or is there a reason to be optimistic? 

Spending Slowed By Finance Advertisers

Declining ad revenue is never a good sign and often signals trouble on the horizon. But Musk took the helm during a tough time for advertisers, especially those in the finance industry. 

Overall, spending on Twitter from financial institutions and services advertisers fell by 65% YoY to $32mm between January 1, 2022, and May 31, 2023. 

Unsurprisingly, MediaRadar saw spending from digital currency (crypto) advertisers fall by 79% YoY from $26mm to $5.5mm. 

For these advertisers, the sharp decline comes following rampant spending and industry growth. Through October 2022, crypto-related advertisers spent $223mm, up 150% from $89mm in 2021. 

Much of that spending came from advertisers at who shelled out millions to sponsor the 2022 World Cup, buy the naming rights to former Staples Center in Los Angeles, and run a Super Bowl ad. 

But their stock turned quickly. 

The collapse of crypto exchange FTX, the massive devaluation of Coinbase, and the bankruptcy of Blockfi disrupted the industry; the crypto winter arrived, and advertisers felt it. 

The CEO of performance marketing firm Headlight, Grant Harbin, said, “Crypto winter is a crypto advertising winter. There’s probably very little consideration on scaling advertising budgets right now.”

At the end of the day, crypto advertisers would have pulled back on Twitter regardless of who was at the helm.

The same goes for banking advertisers who collectively dropped their Twitter budgets by 83% YoY following the collapse of Silicon Valley Bank (SVB), diminishing consumer confidence, and slowing loan growth.

One ad executive told Digiday that they immediately started working with investors to thrash out a bridge loan, while another executive said their ad tech business lost all of its funding because of the financial meltdown. AcuityAds, which had over 90% of cash in SVB, even had to halt its stock trading.

Big Brands Give Twitter a Second Chance

In November 2022, Twitter’s biggest ad buyer, GroupM, began telling its customers, including Google, L’Oréal, Bayer, Nestle, Unilever, Coke, and Mars, that buying ads on the platform was a “high-risk move. The announcement came on the heels of the mass departure of Twitter executives, high-profile impersonations by “verified” users, and concerns about Twitter’s ability to comply with the Federal Trade Commission’s (FTC).

GroupM’s warning was a worst-case scenario for Twitter, which has historically relied almost exclusively on ad revenue to keep it above water. Fast forward a few months, and those fears seem to be lessening. Not only has GroupM removed Twitter’s “high-risk” status, but the number of companies advertising on Twitter is increasing. 

According to MediaRadar data, the number of companies buying ads on Twitter in Q1 2023 increased by 29% to 8k (from 6.2k advertising in Q1 2022). That surge continued into Q2, with the number of companies buying jumping by 34% YoY in April to 4.8k companies. That said, the number of companies fell in May by around 25%. 

Even more promising is that many companies are spending big. 

Number of advertisers on Twitter graph

Companies that spent more than $5mm on Twitter between January and May 2023:

  • Amazon (+46% YoY) 
  • Apple (+68% YoY) 
  • Buzzery (+1,000% YoY) 
  • Comcast Corporation (-41% YoY) 
  • Hewlett Packard Enterprise Development (+1,000% YoY) 
  • IBM (+643% YoY) 
  • (+96% YoY) 
  • The Motley Fool (+1,000% YoY) 
  • The Walt Disney Company (-50% YoY,
  • Warner Bros. Discovery (+330% YoY) 

Outside of The Walt Disney Company and Comcast Corporation, these industry giants are regaining trust in Twitter, collectively spending $246mm or 32% of the overall investment in Twitter ads during this time. 

The Motley Fool Holdings Inc. data

As Twitter regains the trust of advertisers with deep pockets, those with less to spend will naturally grow more comfortable, which is even more good news considering nearly 70% of the companies that invested in Twitter spent less than $10k (these advertisers were responsible for just 2% of the overall investment through May 2023.) 

Advertisers’ spend on Twitter chart

What’s Next for Twitter Advertising? 

Elon Musk has a history of ruffling feathers, but he also has a penchant for turning everything he touches into gold. Betting against him to restart Twitter’s advertising engine probably isn’t the best idea. 

Although ad revenue is down, there seems to be a path forward under new CEO Linda Yaccarino, who helped overhaul NBCUniversal’s advertising sales business and launch its ad-supported streaming platform Peacock in 2020.

In May, Twitter extended into open-programmatic advertising, making its inventory available to outside parties for the first time and, more importantly, easier for ad dollars to flow through its walls. 

It’s a savvy move but not unexpected.

“It’s almost like Twitter doesn’t really have a choice but to go down the ad tech route because they need to explore every avenue they can to fortify that ad revenue stream following the changes made to policies and content moderation as well as the loss of personnel,” said Evelyn Mitchell, a Senior Analyst for Digital Advertising and Media at eMarketer. 

Twitter also plans to focus on video, creator and commerce partnerships to introduce revenue streams beyond advertising. 

So, what’s next for Elon? More innovation, efforts to regain advertisers’ trust, and a cage match with Mark Zuckerberg

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