Twitter, the Elon Musk-led social media platform is facing heavy ad revenue losses. Musk purchased the company for $44 million in 2022. Since then, the company lost more than half of its advertising revenues. The New York Times reported Twitter’s April revenue as $88 million. It dropped 59% compared to last year. Since then, revenue has consistently missed weekly sales estimations.
We’re still negative cash flow, due to ~50% drop in advertising revenue plus heavy debt load. Need to reach positive cash flow before we have the luxury of anything else.
— Elon Musk (@elonmusk) July 15, 2023
Twitter’s ad revenue makes up 90 percent of the company’s revenues. Twitter CEO, Elon Musk has previously stated that the company had not witnessed any rise in sales expected in June. He further commented that July was looking promising. However, Twitter’s ad sales staff disagrees with their CEO. They have raised concerns about the rise in hate speech and explicit content on the platform being the primary reason for the aversion to advertisements. Users complained that the ads featured online gambling and marijuana products.
Twitter laid off 7,500 employees to cut costs during the takeover. With this, Musk was on a path to posting $3 billion in revenue in 2023, one-third of 2021. However, the decrease in ad revenue was a signal that the aggressive cost-cutting approach was not enough to attract advertisers. They cited that the main reason for advertisers to leave the platform was the changes made in content moderation. They felt that the platform had become very erratic and disorderly.
Twitter has suffered a backlash because of its constraints on user activity. Recently, they placed certain restrictions and cost-cutting measures like allowing only Twitter Blue members to get blue ticks. It was followed by limiting the number of visible tweets. It was done to address data scraping and system manipulation by third-party apps. Due to these restraints, big advertisers like Apple, Amazon, and Disney have spent less on the platform than in previous years. The large banner ads, which cost as much as $500,000 for 24 hours were left unsold.
A few months ago, Musk commented that most advertisers who had turned away had returned. He also stated that the company could achieve a positive cash flow in the second quarter. With a vision to make the platform more creator and ad-centric, Twitter named Linda Yaccarino as the new CEO.
Is There Hope for Twitter?
Meta’s Threads registered more than 100 million users within five days. In response to this rivalry, Twitter has created TweetDeck. This program will allow users to monitor multiple accounts together and only be available to verified users. Twitter hosts more than 200 million regular users, but constant technical failures have turned many away.
It’s even more over than previously thought possible pic.twitter.com/8mI7mkZFav
— Ramp Capital Guy (@RampCapitalLLC) July 17, 2023
In a recent development, Threads has also limited the number of posts visible to users citing spam attacks as the main reason. CEO Adam Moss took the platform to make this announcement. In addition, Threads is currently unavailable in Europe. New legislation has temporarily prohibited Threads launch. Meta’s privacy guidelines still raise concerns as it requires user access to track and share user data across sister platforms.
This will raise questions regarding which platform users prefer. The initial hype for Threads is slowly waning. The sun shines over Twitter as they expect users to return to the platform following rival apps facing similar concerns.
- Netra is a Dual Masters graduate in International Business and Marketing. She is a content-writing enthusiast and a social media addict. In her downtime, you will find her headbanging to Pop songs from around the world. She is also a sports fanatic and especially loves F1, Volleyball, and Cricket. Her hobbies are baking and watching Anime.
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