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One year in: Inside X (formerly Twitter) and its complicated relationship with advertisers

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Roughly two months into Elon Musk’s ownership of Twitter, the billionaire mogul held a crucial meeting with the CMO of one of the platform’s major advertisers. This particular advertiser had halted their Twitter ads shortly after Musk’s arrival, and the CEO wanted to sit down and hash things out.

Musk sat attentively, carefully absorbing the marketer’s concerns over the harmful content on the platform, including his own posts. When the marketer finally paused, the entrepreneur delivered a statement that encapsulated the ongoing discord between the platform and its advertisers. 

Musk suggested the marketer should pull all their ads from the platform so he could prove that Twitter was more effective than any other advertising channel. To no one’s surprise, the marketer flatly declined. Musk just couldn’t fathom why.

Fast forward to now, a year into Musk’s tumultuous tenure as Twitter’s owner, and this episode is still a vivid example of the challenges marketers face on the platform. They’re still not on the same page with the billionaire and his vision for the platform now known as X, just like they weren’t back then — even as far back as Musk’s first (and only) meeting with its then-Influence Council (a select group of Twitter’s top advertisers) following his dramatic takeover.

That meeting took place on Nov. 3 last year, just days after Musk assumed control of Twitter. Lou Paskalis, CEO and founder of AJL Advisory, who was a long-standing member of the council, said that these meetings typically had approximately three dozen participants. They were held in person until the pandemic and occurred three or four times a year. But the Nov. 3 virtual Zoom call, which took place at 10 a.m. PT, was a last-minute substitute for the scheduled multi-day, in-person offsite with the council in Healdsburg, California, which had been postponed. The virtual meeting was hosted by Robin Wheeler, in her new role of head of revenue, with Musk in full attendance.

The billionaire had been persuaded by his team to talk to the company’s advertisers and reassure them that he was the right person to lead its future, despite the chaos surrounding the takeover. It seemed to have an effect, even if it was somewhat superficial, according to some who were on that call. Musk said all the right things and made the right promises. He emphasized that changes wouldn’t happen without consulting the platform’s Content Moderation Council and stressed his commitment to brand safety. Advertisers were pleased.

Then came the topic of Musk’s tweets. Someone asked him whether he thought his posts were brand safe. Musk’s response was pretty casual: “You’ll have to separate me and what I do on my personal account from the Twitter brand and company,” was Musk’s message to the 118 advertisers, which included CMOs from Mastercard, GoFundMe and Microsoft. Silence followed. It was clear this approach wouldn’t fly with these ad executives. Then one marketer spoke up, as one attendee reported, saying, “Elon, you realize we can’t do that. We have bosses, and we need to be able to defend our actions, and no one has ever seen a situation where a CEO has a different talk track than the enterprise.”

After that meeting, the Influence Council was scrapped for good. But it certainly wasn’t the final instance in which Musk would make it clear that he just didn’t grasp what advertisers were looking for.

A consistent pattern of failing to impress advertisers

Barely a month after that ill-fated Zoom call, Musk was at it again. Anne Collier, a former member of Twitter’s Trust & Safety Council (a voluntary group of around 100 nonprofits from around the world), recounts that period like it was yesterday.

Under former CEO Jack Dorsey, Collier said she and her council colleagues got the impression that he and the team took safety seriously. And while things plateaued under Parag Agrawal, who succeeded Dorsey before selling Twitter to Musk, nothing was dismantled. Musk, however, didn’t seem to share the same level of interest or commitment to safety.

As soon as this discrepancy became clear, Collier and two of her council colleagues resigned from the organization. They saw independent data that had been published by the Center for Countering Digital Hate and the Anti-Defamation League, which showed a significant increase in misogyny, anti-Semitic slurs and racist comments on the platform.

But after resigning, Collier and the others were flooded with hate speech and threats of violence via Twitter and their emails.

And as for Musk? “He was literally tagging us in retweets of attacks from people he had reinstated on the platform, one being the conspiracy theorist who started #pizzagate, who openly attacked us on Twitter,” she said.

Not only did this action starkly contradict Musk’s earlier commitment to prioritize user and advertiser safety, but it also ran counter to everything Twitter had previously stood for. The truth is, those first few weeks and months after Musk’s takeover saw Twitter’s culture do a 180-degree shift. It went from a company where marketers had a clear understanding of where they stood with the platform, to a situation where there was virtually no communication at all, except for the announcements that marketers stumbled upon through the press.

And all this happened because, when Musk took over Twitter, he made some major cuts to its workforce. It went from around 7,500 employees to just about 1,500. As more people left, the gap between the company and its advertisers just kept growing. And Musk did try, though perhaps misguidedly, to bridge that gap.

One ad exec who exchanged anonymity for candor said that Musk frequently asked his senior commercial execs in those early days of his ownership, “What additional data do you need to get advertisers back on the platform?”

But advertising hinges on trust and building strong relationships with platforms. On the plus side, Musk did seem to comprehend a crucial aspect to advertisers: discounts.

There were plenty of them up for grabs in the run-up to the Super Bowl earlier this year. Musk made an offer to match up to $250,000 in ad spending per advertiser for any funds invested during the month of February. The fact that even a Twitter sales representative referred to the move as “bonkers” to an ad exec interviewed by Digiday speaks volumes. However, what’s more revealing is that numerous marketers opted not to seize this opportunity. 

“We took it to some clients, and a few of them did not take advantage because they were still worried about the PR around getting back on the platform,” said the ad exec, who spoke anonymously because they were not authorized by their company to talk to Digiday about Twitter.

The social platform had gone from being one of the main focal points for many Super Bowl campaigns to being something of an afterthought. And it remained so right up until NBCU’s Linda Yaccarino was named as Twitter’s CEO in May.

Then, marketers started to hope. Finally, they thought, “someone who understands us,” as Digiday reported at the time. GroupM was so optimistic about the change in leadership it began recommending to its advertisers that spending on Twitter was no longer a major risk. But despite all this fanfare, actual spending on Twitter never witnessed a significant increase. The much-anticipated “Yaccarino bounce” that many had predicted failed to materialize.

In fact, one ad exec who has been in talks with a number of Twitter’s advertisers over the past year confirmed that while advertisers have indeed returned to the platform, they’re only paying a fraction of what they used to prior to Musk’s takeover. Moreover, a lot of them have been spending the bare minimum because they didn’t want to get called out or abused online publicly by Musk.

What the numbers say

And the numbers don’t lie.

Back in June, an internal presentation seen by The New York Times acknowledged that Twitter’s U.S. advertising revenue between April 1 and the first week of May was $88 million, down 59% from the year prior. The same document said that the company had regularly fallen short of its weekly sales projections, sometimes by as much as 30%. And this admission aligns with the more recent ad revenue figures that were tracked by Guideline, which reported that the platform averaged a 55% year-over-year revenue decline, which increased to a 61% year-over-year decline between May and August, despite Yaccarino joining the company in the summer. 

In short, restoring advertising to pre-Musk levels is an incredibly tall order. Even if that somehow happens, it might not suffice.

Marketers weren’t exactly enthusiastic about making big investments in Twitter even before Musk’s arrival. Convincing them to do so now, given the current state of the platform, is undeniably one of the most challenging tasks in the advertising industry.

This challenge is further complicated for Yaccarino due to Musk’s habit of making controversial statements. It’s making it harder for marketers to buy into what Yaccarino tells them. Adding to the complexity, the well-respected media executive appears to have become something of an emissary for Musk, increasingly seen as someone trying to explain his actions, as her recent interviews with CNBC and The Financial Times, and at the Code Conference demonstrate.

“Linda was a big Twitter advertiser [at NBCU],” said Paskalis. “She knew enough about Twitter and its superpowers. So she has a working knowledge of the experience side, and she’s learning about the operational side. But as good as Linda is, and there’s nobody better in the advertising industry at finding money, I don’t know that she can overcome that [Musk’s interference with bringing back significant ad dollars].”

But this is now Musk’s Twitter (or rather X) — a platform deeply entwined with the ad industry but increasingly distanced from it.

Nowhere was that clearer over the last 12 months than in June at the Cannes Lions ad festival. Instead of the traditional grand delegations, beach takeovers and flashy partnerships of the past, there were a select handful of X’s executives inside the luxury first floor vice presidential suite 140 at the JW Marriott in Cannes, which boasted a 68-square-meter terrace and a 50-square-meter lounge with a capacity of 80 people. The team, which included Chris Riedy (former vp of global sales and marketing), Alex Josephson (vp of brand creativity) and Tim Perzyk (vp of marketing and research) had two main objectives, according to a festival attendee at a meeting there. 

Firstly, they were intensifying their collaborations with both current and potential partners, while also actively delving into the realm of brand safety solutions. Secondly, the team was on a mission to re-establish connections with existing clients, as well as advertisers who had temporarily halted their spending following Musk’s arrival.

As Riedy and the rest of the delegation met with marketers while overlooking the Croisette in the South of France, one thing was clear, according to one of the execs there: Twitter’s reps certainly weren’t panicking about the state of their ad business. Instead, it was almost a business-as-usual attitude with their network. The select team laid the foundations for its Integral Ad Science brand safety partnership that followed, courted new partners and began its work to rebuild the trust it had lost with advertisers since November.

In some ways, Twitter’s presence in Cannes symbolized how much the business has changed for marketers, especially since its rebrand to X in July, for better or worse. Despite Twitter’s former employees coining the hashtag #lovewhereyouworked, there was a sense of excess in terms of staffing and culture, according to one ad exec who worked with the team both pre- and post-Musk. Now, the team is more streamlined, which enables quicker communication and a greater sense of urgency in their work, continued the exec.

That brings us to the final weeks and months leading up to one year since Musk completed its $44 billion deal to acquire Twitter.

Since September, select marketers have had the chance to attend X’s first Client Council meeting (which took place on Sept. 20), explore the platform’s new video ad pitch and meet with its ads team at X’s offices in San Francisco and New York. A product launch and a series of meetings — in many ways, this mirrors much of what’s transpired over the past year.

Marketers have often felt like this is a repetitive cycle, a seemingly endless back-and-forth between an unstoppable force and an immovable object. Marketers voiced their frustrations, Musk and his team listened, and then they made adjustments to the ads business — sometimes aligning with marketers’ feedback, and other times not so much. Perhaps — and it’s a significant “if” — the second year of X’s ownership will bring about similarly substantial changes, potentially in a more positive direction.

X did not respond to comment for this story.

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