Shulou(Shulou.com)11/24 Report--

March 24, an unavoidable question for Twitter is that whether the company can survive in the next few months depends on how its new owner, Elon Musk, handles its relationship with advertisers.

Cooperation between Twitter and advertisers has not been smooth since Musk officially took over last October. Many big-name advertisers have temporarily stopped placing ads on Twitter platforms. Nearly five months later, the situation shows no obvious improvement.

As of February, more than half of the top 1000 advertisers on Twitter platform before Musk's acquisition had stopped advertising, according to Pathmatics, a digital marketing analytics firm. According to Pathmatics, only six of the top 10 advertisers before Twitter was acquired are still advertising on the platform. This has a serious impact on Twitter revenue. It was reported in December that the company's revenue fell by 40%. In addition, fewer users seem to visit Twitter. The number of users visiting Twitter ad pages fell 18% in February from a year earlier, according to market research firm SimilarWeb.

Advertising executives, former Twitter employees and others in the industry explain why Twitter still has a poor relationship with advertisers.

Sources said there was a lack of confidence in Mr Musk's ability to keep his promise to prevent Twitter from becoming a "hell", concerns about excessive turnover in Twitter's sales department and confusion about the platform's policy on content censorship.

What worries them most is that Musk is more relaxed in content censorship and has turned Twitter into a place where people can post all kinds of bad content without having too many consequences for themselves. Big companies do not want their own brands to have anything to do with bad content, thus endangering "brand safety".

They are also worried about Musk himself, as he continues to post offensive tweets and recently mocked a disabled Twitter employee. Some advertising executives say they have no idea who to share their concerns to because Mr Musk has fired many key members of the Twitter sales and brand security team. Industry insiders say all this has led to a decline in trust in Twitter among a small number of people in charge of major advertising budgets.

"Musk has no idea how advertising works," said Lou Paskalis, a senior advertising executive and founder of AJL, a consulting firm. "I think he thinks it's a science first, then an art, and in fact, it's an art first, then science."

Twitter didn't respond to a request for comment. But Musk said in an interview earlier this month that some advertisers were hesitant to return to Twitter.

"what I want to say to advertisers and brands is to use Twitter for your own sake and believe what you see on Twitter," he said. " Musk says the bad content on Twitter is actually lower than it was before he took over, and brands worried about their reputation can also choose which tweets to advertise. Several recent external studies have found that the number of undesirable content on the platform has continued to increase in the months since Musk took office, but Twitter says the "spread" or page views of the content has declined.

In the final analysis, Twitter needs advertisers, not advertisers. Twitter's user base is much smaller than Facebook, YouTube and Instagram. Brands can easily shift advertising budgets to larger social media platforms. Whether Musk can win back the favor of the brand, or find a viable alternative profit plan, will determine whether Twitter can survive. Although Mr Musk said Twitter was close to breaking even by slashing costs, he warned in November that Twitter could still go bankrupt. If advertisers do not come back, this risk is bound to increase.

"I don't believe Musk." Advertising executives often control multimillion-dollar marketing budgets. The advertising business, especially the big brand ads on Twitter, often stems from the close working relationship between these people and the managers of the Twitter sales team.

But in the past few months, as the initial uncertainty surrounding Mr Musk's takeover of Twitter has turned into prolonged chaos, many of these close relationships have ceased to exist.

An advertising executive who manages tens of millions of dollars in advertising spending for brands on Twitter said that within 72 hours after Musk took office, most of their clients temporarily stopped spending on Twitter "just to avoid falling into unpredictability", but he thought the situation would stabilize.

"there's a lot of noise in this industry," advertising insiders said. "if something bad happens to a platform, you stop and wait for the problem to disappear."

But then a new problem emerged. Massive layoffs and resignations have affected the head of the Twitter sales and brand security team. Musk suddenly began to launch controversial products or adjustment policies such as Blue V certification, and restored thousands of accounts that had previously been banned for the existence of undesirable content. At the same time, Musk himself kept posting various comments on Twitter. As a result, most advertisers have extended their suspension of Twitter.

The advertising executive also said that although Twitter has used substantial discounts and promotions in recent months to encourage customers to resume advertising. But advertisers are reluctant to strike a deal without knowing who they will work with.

"I don't know if the person I'm talking to today will be here tomorrow or next week," he said. "Trust in advertising is very important. I don't believe Musk."

Even if advertisers don't trust Musk, it would help if he had a reliable deputy. But many trusted executives have left Twitter, including Sarah Personette, chief customer officer, Yoel Roth, head of trust and security, and Robin Wheeler, vice president of customer solutions. Several sources are unsure whether the recently appointed sales director, Chris Riedy, is still working at the company. It was reported in February that Riddy had also been laid off in the latest round of layoffs, but other sources close to the company said he was still working on Twitter.

Twitter has also stopped convening ad impact committees, an industry practice that Twitter holds quarterly panel meetings with about 30 top advertisers, the source said. Pascalis said the Advertising impact Committee was an important occasion for Twitter executives to discuss "real business issues" with the largest advertisers, allowing Twitter executives to build close relationships with brand chief marketing officers and advertising company executives. Musk met with committee members shortly after taking office in November last year, but according to Pascalis, they have not seen each other since then.

To make matters more complicated, Musk initially took an openly provocative attitude towards the advertisers Twitter needed to win over. In November, he publicly threatened to "thermonuclear roll call and humiliation" advertisers who left Twitter.

One advertiser said, "I can spend my money elsewhere without worrying about myself and my clients being attacked by Musk or what he will say to force me to turn off the ad."

So far, there is no sign that Musk will improve his public image on social media, thereby reducing his impact on advertisers. In recent weeks, in addition to a public quarrel with a disabled former Twitter employee, he has shared a joke suspected of sexism on Twitter.

How to save the business Twitter needs to change the way it advertises if it is to continue to operate. Musk is trying to change the company's strategy and reduce its reliance on big-name advertisers. But the simplest solution is to repair Twitter's relationship with the brand, some advertising executives say, if Musk relinquishes control of Twitter.

Musk has his own ideas about how to make Twitter profitable.

At first, Musk's plan was to reduce his reliance on advertising. He said he wanted to turn Twitter into a subscription-based service model and make money by charging users for subscription services. The problem is that Musk failed in his first attempt to launch Blue V Certification. As of mid-January this year, Tweet had 180000 subscribers, accounting for only 0.2% of the total number of users on the platform, which is still not enough to influence the company's profits.

Recently, Musk proposed another way to solve the advertising problem: targeted advertising. Twitter's idea is that Twitter should use machine learning to predict preferences based on what users post, making ads more in line with users' interests.

"historically, most of Twitter's past ads are irrelevant, and we have been wasting people's time. That's not good. Looking to the future, Twitter will have very relevant useful ads." Speaking at a Morgan Stanley meeting earlier this month, Mr. Musk said the new approach would "significantly increase revenue."

Musk said Twitter's new advertising model will be similar to Google, placing ads based on what people are interested in.

People who know the online advertising industry, including former Twitter advertising and product employees, agree with Musk and believe that Twitter advertising products have room for improvement. But some question whether Mr Musk's approach is reasonable because, unlike Google and Facebook, Twitter has less data that can be used for targeted ads.

Facebook can learn about people's background, friends and interests through user information and groups. Google controls users' interests based on what they enter in the search bar. By contrast, most Twitter users do not provide this valid information because they do not need their real names to create Twitter accounts, and most people are browsing tweets rather than searching for specific content.

"search advertising and Twitter advertising are two completely different models," said Jason Goldman, vice president of Twitter products from 2007 to 2010. "it's not even Apple to oranges, it's completely different." Mr Goldman says Mr Musk's claim to make Twitter ads more like Google "confirms that he has no idea how the online advertising industry has developed over the past 20 years."

Twitter also has far fewer users than Facebook and Google. Although Musk claims that the number of daily active users on Twitter is higher than ever before, the latest estimates are mixed. Twitter user growth has been declining year-on-year in the past few months, according to analytics firms SimilarWeb and Pathmatics. But Apptopia, another company, said Twitter user growth in the past three months was slightly higher than in the same period last year.

Despite his problems, Mr Musk has a chance of regaining the trust of advertisers. The chief executive of WPP, one of the world's largest advertising agencies, said recently that Twitter "seems to have been much more stable in the past few months than at the end of last year" and that "customers want to start thinking about how to re-use Twitter". Executives at Publicis, a large advertising company, made similar comments in December last year, leaving room for advertisers to return to Twitter.

In recent weeks, Twitter has announced that it is developing new tools that allow advertisers to ensure that their content does not appear next to controversial tweets, but it may take time to win their trust. "at the moment, people don't believe that Twitter can really live up to these promises," said Ruben Schreurs, chief product officer of advertising media consultancy Ebiquity.

Some advertising executives believe that a simple solution to the problem is to find a new CEO. Sources said that if Musk resigned at the end of the year, as he said, it would greatly ease the concerns of advertisers.

"he should resign as chief executive, stop tweeting, become chairman, appoint a board of directors and establish a governance structure," said one advertising executive. " But the problem is, "Twitter is dead now, and even if you have a new CEO, I don't believe he can last a month."

But if Mr Musk publicly supports a "steady and serious" sales leader, promising that "the criteria for advertising on Twitter are very clear", he can continue as chief executive. At that time, advertisers "will be very welcome to start coming back," Schles said. "I'm pretty sure about that."

In a conference call with Morgan Stanley, Mr Musk said Twitter would be close to breaking even by the end of the year. But he also needs to increase revenue to keep Twitter running.

If Musk doesn't change his advertising strategy, Twitter may continue to collapse. Nowadays, the reliability problems of the platform have occurred one after another, and the cases of network outages and product failures are increasing. If the company can't pay its employees to run the platform, there will be more or less of this problem.

A former employee of Twitter's sales team said in an interview that when Musk took over, they initially hoped that he would energize the company's advertising business and make Twitter more profitable and competitive.

But Musk is "destroying the company and everything it has built," the former employee said. "for what purpose, I don't know."

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