Twitter requires sponsors. There is no need for Twitter.

Elon Musk realized that Twitter needed advertisers after months of criticizing the social media platform and its main revenue stream. Musk tried to soothe worried advertisers in an open letter published on Twitter on October 27 by assuring them that Twitter wouldn’t turn into a “free-for-all hellscape” under his leadership. Musk still didn’t seem to grasp the fact that advertising don’t require Twitter, though.

Musk tweeted that Twitter had seen a “huge loss in revenue” a week after the takeover, which was when the cold truth finally hit him. The information was made public on the same day that he fired about 50% of Twitter’s staff, including some workers who were in charge of upholding the guidelines for content moderation that advertisers rely on to make sure their advertisements don’t appear next to offensive or divisive content or content that is otherwise not brand-safe.

Twitter advertisers can easily and quickly decide to halt their campaigns. According to estimates from Insider Intelligence, Twitter is not a crucial component of the media strategies of the majority of businesses and only represents 1% of all global digital advertising expenditures.

Numerous marketers have already second-guessed their commitment to Twitter due to the macroeconomic climate. The final nails in the coffin for their spending plans were Musk’s unpredictable conduct, a lack of a clear strategy for the future of the advertising industry, and worries about the rapid dissemination of misinformation. Advertising on Twitter simply isn’t profitable enough to take the risk.

Due to the nature of its advertisers, Twitter is especially vulnerable to a downturn. While businesses make up the great bulk of Twitter’s advertising, Meta and Google have sizable bases of small- and medium-sized business marketers. Big businesses on Twitter are more risk-averse than performance advertisers since they are frequently more concerned with raising awareness than with performance-based objectives like sales and conversions. Additionally, Twitter lacks a backup stream of ad revenue in the event that brand advertisers stop using the service due to the relative weakness of its performance ad choices.

There isn’t any other potential source of income either.

Musk’s proposal to increase Twitter Blue’s monthly cost to $8 won’t make up for the revenue lost due to a decline in advertiser support. Advertising is not as reliable an income stream as subscriptions, and there is mounting evidence that users are willing to pay for access to social network premium features. However, given that it is an established platform that people are accustomed to using for free, Twitter cannot simply turn a switch to convert its users into paying customers.

Additionally, Musk has yet to perfect the value exchange. Twitter’s blue verified symbol, which had previously been free for accounts of public interest that followed a verification process, will now only be available to those who pay the new charge. Verification, however, is not a premium product; it is essentially a security feature. In addition to overestimating the amount of other users who value the influence that comes with a blue check mark or the other benefits enough to pay Twitter a monthly charge, many of Twitter’s most active users are in uproar over subscriber-only verification.

Paid verification is also a betrayal of Musk’s earlier pledge to improve the platform and simplify the authentication process for users. If malicious actors are able to utilize the tool to promote lies, propaganda, or other damaging content from what appears to be a reliable source, it could also make it easier for misinformation and disinformation to spread.

Given the deal’s on-again, off-again character, nobody should be surprised by the backtrack. But it’s also a perfect example of the main issue with a Twitter run by Musk: his words don’t match his actions.

When allocating their funds, marketers often take into account how trustworthy a platform is, and Musk is undermining what little trust there had in Twitter. His attempts to pacify advertisers have been fruitless, and many of the staff members who might have been able to do so have now gone.

Musk will be compelled to modify and control Twitter in a more moderate manner. Only by maintaining staff motivation will his vision for Twitter’s future be realized, and fear is not an effective long-term motivator. To maintain the income engine in the short term, he needs to figure out a strategy to get advertisers to come back.

Musk won’t benefit from providing Twitter Blue subscribers with a service that has half as many advertising. Right now, Twitter Blue might cost the business even more money. The addressable audience on Twitter, which is already limited in compared to those of other social networks, will be diluted by an ad-light experience.

Insider Intelligence predicted that after the merger, Twitter’s U.S. monthly user base will fall by 0.5% to 57.5 million. That downturn is probably going to quicken under Musk.

The check engine light is flashing while Twitter is functioning. Before he causes any more harm, Musk ought to stop.

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