Despite Elon Musk claiming that almost “all advertisers” have returned to Twitter, new documents obtained by the New York Times reveal this couldn't be further from the truth, with ad sales actually found to be down 59% year on year.
Since Musk took over Twitter, his controversial leadership style and laissez-faire approach to content moderation have turned major advertisers on their heels, drying up the company's main source of revenue as a result.
As the company's valuation continues to tank, it seems clear that a major change of strategy is needed. But will the company's newly appointed CEO Linda Yaccarino be able to save the sinking ship?
Twitter's Ad Revenue Drops 59% YoY
2023 hasn't been a great year for Twitter, and its trajectory isn't picking up any time yet.
According to a company presentation obtained by the New York Times, the company only made $88 million in advertising revenue from the beginning of April to the first week of May, down 59% from the following year. These findings are at odds with CEO Elon Musk's claim two months ago that most advertisers have returned to the site.
The document also revealed that Twitter regularly misses weekly sales projections, often by as much as 30%. But why have so many advertisers turned their back on the bluebird?
Why Is Twitter Struggling to Retain Advertisers?
Since Elon Musk first took the helm at Twitter HQ, he's made a series of controversial actions. From reinstating banned accounts like Donald Trump and Kayne West to pulling back on content moderation, the chief executive has removed many checks and balances designed to keep the platform safe.
To avoid being associated with this digital Wild, Wild West, over half of Twitter's advertisers cut ties with the platform in 2022, and big names like General Motors and Volkswagen have dropped in recent months. While advertisements aren't Twitter's sole source of revenue, they make up around 90% of the company's yield, making this continued drop-off a pretty big deal.
But ad spending isn't the only thing dwindling. Twitter's ad issues have also seriously damaged the platform's valuation. According to Fidelity, the investment firm that owns Twitter, the company's worth has dropped from $44 billion at the time of Musk's purchase, to just $15 billion last week.
Twitter Users Are Turning Away From The Platform Too
As Twitter's downward spiral continues, Pew Research reveals advertisers aren't the only demographic fleeing from the site.
According to a recent survey, six in ten US users have taken extended breaks from the platform within the last 12 months, and over a quarter said they don't expect to be using the app within a year, with this percentage climbing higher for females and racial minorities.
“Some groups are more likely than others to say they have taken a break from the platform, with especially pronounced differences by gender, race and ethnicity.” – Pew Research report
As concerns over technical issues, misinformation, offensive content, and inadequate verification mount, it's hardly surprising that users are hitting the bricks.
And as its user base shrinks and notable Twitter competitors like Bluesky and Mastodon give jaded users alternate ways to connect with people online, there's even less of a reason for users to stay loyal to the site.
All things considered, rebranding the company away from hotheaded Elon Musk is probably the wisest thing Twitter can do to recover its losses. However, despite Linda Yaccarino's impressive advertising experience, it's likely she will face an uphill battle when she takes over the company next week.