Autumn is a frenetic time in the advertising industry, and especially in the US, where much of the budget for the following year’s advertising is spent in October and November through what the industry calls “upfronts” – deals between media companies and their biggest ad buyers.
It was in the hope of securing upfronts that Jean-Philippe Maheu, then Twitter’s vice-president of global client solutions, arranged for calls and meetings between the ad industry, currently Twitter’s only source of revenue, and Elon Musk, who paid $44bn (£38bn) for the social media company on 28 October. Now the platform has been loaded up with debt by Musk – the company will pay an estimated $1.2bn in interest in the first year – Twitter badly needs revenue.
Musk’s tone at these meetings was placatory, with much discussion of brand safety and innovation. But the charm offensive didn’t work. Bruce Daisley, who ran Twitter in the UK and then Europe during his eight years at the company, told me Twitter “doesn’t have anything to tell people for next year”, which means ”no one is putting any money down on the table”. Maheu left the company last week.
While new customers are staying away, Twitter’s existing revenue is being eaten into. Large advertisers – including two of the world’s biggest food companies, General Mills and Mondelez, along with the pharmaceutical giant Pfizer and the car manufacturer Audi – have “paused” their existing Twitter advertising, according to the Wall Street Journal.
Musk has tweeted that Twitter’s “massive drop in revenue” was “due to activist groups pressuring advertisers” in an attempt to “destroy free speech in America”. He then followed this up with a threat to conduct a “thermonuclear name & shame” of advertisers who exercise their right not to use his platform. It’s not much of a threat – for any brand pitching to a younger, more progressive audience, it represents the opportunity to have the platform’s biggest user shout about their values without them paying a penny – and it suggests that Musk lacks an understanding of the industry on which his company’s revenues depend.
The same can be said of Musk’s decision to sack thousands of Twitter staff. Employees around the world were told to work from home last Thursday (3 November) and to await an email that would tell them if they had been sacked. By the following day 3,700 jobs had been cut from a workforce of around 7,500. Whole teams, including those responsible for human rights, marketing, AI ethics and “trust and safety”, were axed. One person who lost their job described it as “the most dehumanising, inconsiderate process… cold, callous and impersonal” and administered with “zero dignity or respect”. The company is now reportedly attempting to rehire some of those it says it fired “by mistake”.
Among these teams were the people responsible for moderating the (often abusive) tweets sent to high-profile individuals such as politicians and footballers. Daisley points out that to remove these roles just before the World Cup risks yet another PR debacle. It may be that the long-term effect of more unfiltered abuse may be enough to drive the platform’s most lucrative users away.
Musk’s plan is to keep influential people on Twitter, but to make them pay for it via an $8-a-month subscription to Twitter Blue, which provides paying customers with the verification and promotion that was once given to verified (or “blue tick”) users for free. Again, Musk seems not to understand that many of Twitter’s most influential users don’t actually like being on the platform: they are already paying to use it by contributing their time and their content to it, in exchange for publicity. In PR speak, the attention that flows from this kind of work is “earned media”. But if these same people begin paying to have their tweets promoted, they become “paid media”, also known as advertising. The US, UK and EU all have laws requiring that advertising should be easily identified as such.
[See also: Whatever Mastodon is, it won’t replace Twitter]
Twitter also claims its Blue service will provide “half the ads & much better ones”. Given that the whole structure of surveillance capitalism has been erected specifically to target consumers with the most effective ads, it is laughable to suggest that a major social network might have been holding back the best ads for subscribers – unless Twitter means the “better” ads are less targeted, and therefore less effective, which will, again, be of some concern to the advertisers themselves.
To have more users, or even all users, verification is a good business goal for Twitter. The single most valuable asset owned by Apple is the credit-card verification of more than 500 million Apple Pay users, which makes its devices effectively one of the largest consumer markets in the world. Daisley says he agrees that on Twitter, “everyone should be verified – a blue tick shouldn’t be this velvet rope”, and that a small one-off charge for verification would help make Twitter a better place. More identifiable users would probably make for better discourse, and happier advertisers.
But that’s not what this is about. Elon Musk is intelligent enough to understand the advertising business, but he doesn’t want to. Tesla, the car company that is the source of all his wealth, has never made a TV commercial or paid for a billboard. Musk doesn’t need ads, because he doesn’t make his money from selling cars but from selling a financial product to an army of retail investors and other speculators. What he has perfected as a user of Twitter is a means to turn attention into socially agreed market value, bidding up the narrative of his company and his personal brand until they are both leaders in market capitalisation. He has told investors he will build cities on Mars and embed internet connections in their brains, and they have rewarded him by making Tesla a $600bn company.
The Twitter takeover is about turning that triumph into something more durable. The irrational exuberance that made Musk the world’s richest man is being eroded by rising interest rates, and with it the carnival atmosphere of the era of cheap money. In its place, a more aggressive approach to message control is taking shape.
His detractors are subject to new rules: Musk, who tweeted that “comedy is now legal on Twitter”, almost immediately banned the comedian Kathy Griffin for parodying his account, while an advert that questioned Tesla’s safety systems was allegedly banned for being “political”.
At the same time, Musk himself is becoming more overtly political than ever before. In recent months, he has suggested a policy of appeasement towards Vladimir Putin, he has insulted politicians such as Bernie Sanders and Elizabeth Warren, and he has used an attack on Nancy Pelosi’s husband to promote a baseless conspiracy theory. No major advertiser wants to be associated with this kind of rhetoric – they are similarly averse to Tucker Carlson on Fox News – but this doesn’t mean there isn’t money to be made from it.
After all, Twitter contributed to Donald Trump’s election as the US’s 45th president and it could well help to install Ron DeSantis (whom Musk has publicly backed, along with the Republican Party itself) as its 47th. Perhaps the aim is not to be the next Mark Zuckerberg – who is already making his own lay-offs in the deflating market – but the next Rupert Murdoch. The tech boom may be over for now, but power never goes out of business.
[See also: How long does Facebook have left?]
This article appears in the 09 Nov 2022 issue of the New Statesman, On the brink