Less than two weeks ago, Elon Musk announced his bid for a Twitter takeover. Despite an initial attempt at a “poison pill” from the Twitter board, allowing existing shareholders to buy stocks at a substantial discount to dilute the holdings of new investors, yesterday the platform accepted Musk’s offer.
Acquiring Twitter for around $44bn (£35bn), Musk says he wants to make the platform “better than ever”. In a statement, the Tesla boss suggested new features, making the algorithms open source, “defeating the spam bots” and verifying all users are on the top of his agenda.
While he attempts to unlock the platform’s “tremendous potential”, what does this signify for its advertising and marketing capabilities?
Twitter’s Q4 2021 results put advertising revenue at $1.41bn ($1.1bn), up 22% year on year. Media analyst Ian Whittaker describes the site as a “middling sized platform lacking the reach of the big platforms”. Will the Musk era change that?
“It’s not a brand builder,” says analyst Alex DeGroote, who suggests the Musk takeover is “potentially a total gamechanger” and something about which marketers need to be fully alert.
“The site may look the same for the time being, but the ethos may be very different,” he adds.
I hope that even my worst critics remain on Twitter, because that is what free speech means
— Elon Musk (@elonmusk) April 25, 2022
While Twitter hasn’t yet managed to reach the heights of Instagram and Facebook for its advertising offering, associate analyst at GlobalData Daniel Clarke points out that the platform has “improved a lot in terms of advertising, which makes up the majority of the company’s revenue”. However, he still sees “room for improvement”.
The company revealed in its fourth quarter result its “monetisable daily active users” – meaning those who see ads on the platform – increased by 6 million to 217 million over the last three months of 2021.
Last night, Musk himself gained a record number of followers – 877,000 in just a day, according to data from Emplifi. His tweet about free speech became his best-performing to date, with 3 million interactions.
‘The Elon Musk Show’
Free speech is one of the most contentious topics surrounding Musk’s bid.
As a free speech advocate, the Tesla boss talks about unlocking Twitter’s potential, which could mean becoming “the town hall for global democracy” says DeGroote.
Musk’s interest in free freech could also signal a return of Donald Trump to the platform, who was given a lifetime ban following the Capitol insurrection in January 2021. Trump has already refuted this. DeGroote suggests the Musk takeover will “redress the balance politically”, with the “consensus view” being Twitter is “left of centre”.
CEO of International Marketing Partners, Allyson Stewart-Allen believes Musk’s motivation for buying Twitter is straightforward. She suspects he wants to “own a mouthpiece” to benefit himself and his companies.
“I don’t think it’s about freedom of speech and democracy, which is the angle that he’s been taking,” says Stewart-Allen. “Unregulated unbridled freedom of speech leads to things like Facebook.”
She questions how healthy it is to have another social media platform that “does not intervene, or self monitor to a high standard.”
A lack of moderation could impact both users and advertisers. Clarke points out that if content moderation is “lazily applied” under Musk, advertisers will be worried about the potential impact to their brands.
“This is a clear unknown factor when it comes to advertisers,” he adds.
There is a danger this becomes the Elon Musk show. And more political. Most brands will not want this
However, head of tech at Enders Analysis Joseph Evans sees an opportunity.
“You can see the argument that maybe it’s actually not good for a widely used platform to be moderating in order to create the best environment for corporations to advertise,” he suggests.
Clarke agrees there are possibilities for marketers, the idea being that if users feel like the platform is a “better place for debate, or is more interesting generally, monthly users will start to increase.”
“This would be great for marketers, who would have a larger pool of potential revenue streams,” he adds.
However, DeGroote believes marketers should stay away until there is clarity about what a Musk-owned Twitter will look like.
“There is a danger this becomes the Elon Musk Show. And more political. Most brands will not want this,” he says.
But what about Musk’s own brands? Could the public perception of Twitter taint the prospects of Tesla or SpaceX?
“The thing I would worry about is the contagion of the other brands that could be tainted by whatever happens on Twitter,” says Stewart-Allen.
“So if people are fed up with Musk on Twitter, then they might say, well, ‘Musk is a twit and I’m not going to buy Tesla either’ and so the other brands might be tarnished.”
‘Unlocking’ Twitter’s potential
Hand in hand with free speech goes brand safety. Given Musk has talked of greater transparency around algorithms and better authentication of users, ISBA director general Phil Smith admits on face value these are moves advertisers are likely to welcome. But that is not the full story.
“If ‘freedom of speech’ means Twitter would pull back from all the progress made by the industry on responsibility, transparency and accountability, led by the Global Alliance for Responsible Media, ISBA and its members would be very concerned,” Smith adds.
Evans also points out that some advertisers turn off buying ads on Twitter as soon as anything controversial happens on the platform, as they don’t want to be adjacent to those conversations.
“A lack of moderation could make that worse,” he notes.
Everyone thinks he’s a god because he’s made a lot of money. But I don’t think that’s really the test of success. The test of success will be user activity.
Allyson Stewart-Allen, International Marketing Partners
Looking at the potential impact on advertising broadly, Musk’s takeover could see the company move in a different direction.
“We could see Twitter relying less on advertising altogether,” Evans says, suggesting the platform could move over to a subscription model. That being said, he doesn’t believe much will change on the product side.
Reflecting on realising Twitter’s value, Evans thinks Musk still has a way to go to work that out.
“No one has been able to figure out a way of unlocking that potential,” he adds.
The true test for Musk will be helping the platform to grow, which may not come as easily as he believes.
“Everyone thinks he’s [Musk] a god because he’s made a lot of money. But I don’t think that’s really the test of success,” she adds. “The test of success will be user activity.”