Rocked by controversies after Elon Musk took over in October, Twitter saw advertisers flee for weeks on end. New data suggests that the effect was temporary, with Twitter having managed to grow its advertiser roster to 3,700 in the fourth quarter of 2022 from 3,000 in the third quarter, according to an ad intelligence firm’s report released Wednesday.
MediaRadar sampled more than 15,000 U.S. companies and concluded that “the number of advertisers on Twitter stabilized after a drop-off following news of Musk’s takeover,” the company said. Twitter averaged 3,330 U.S. advertisers per month on average in the first quarter; 3,740 in the second; 3,000 in the third; and 3,700 in the last three months of the year.
After his takeover, Musk at first tried to reassure advertisers, then threatened to “name and shame” those who canceled or paused campaigns. Daily advertising revenue reportedly plummeted by as much as 40%. Longtime CMO Leslie Berland, who reportedly gave Musk his first office tour, left on November 1. A sales staff heavily hit by layoffs offered inducements for advertisers to return, which could account for some of the increase in the number of companies buying ads.
“Make no mistake, the early stumbles wreaked havoc on Twitter’s ad business,” said MediaRadar CEO Todd Krizelman. “What we’re seeing with Twitter is reminiscent of other social platforms, albeit with some nuances. Though many major brands have dropped Twitter, many have not, and their spend has grown, in some instances. We’re also seeing smaller Twitter advertisers spend more than they have in the past, sensing a pricing opportunity. Ultimately, Twitter’s scale and value proposition remains attractive to many buyers.”
Large media companies such as HBO, Apple and Bose are among those still actively advertising on Twitter. The MediaRadar data shows that Twitter’s business is still not at the level it hit before Musk’s ownership, and “to win new advertisers, Twitter will need to address brand safety concerns and deliver more capabilities and premium inventory,” Krizelman said.
Twitter is taking action on the brand safety front, a critical issue for advertisers. On Wednesday, Twitter announced it was expanding its work with software firm DoubleVerify, whose proprietary tools enable Twitter’s advertisers to evaluate the suitability of ad campaigns.
DoubleVerify has spent months building out technology for Twitter’s U.S.-based advertisers to use, CEO Mark Zagorski told TheWrap in a phone interview Tuesday.
“We report back to the advertisers about what that environment looks like and whether Twitter is doing its job to keep their ads away from certain content they don’t want to be around and then allow those advertisers to optimize or change, or filter the targeting they’re using,” Zagorski said. “Think of us as an independent accountability project.”
Zagorski said the tools comply to standards formulated by 4A’s Advertising Protection Bureau and WFA’s Global Alliance for Responsible Media. When flagged, the content is categorized and labeled as “profanity, hate speech and terrorism and crime … all those terrible things that advertisers don’t want to be around,” he added.
AJ Brown, Twitter’s head of brand safety, called DoubleVerify’s solution an “industry-leading technology” that offers “depth of media quality measurement.” Twitter has worked with DoubleVerify since 2018 to detect fraud and measure display and video ad views.
Experts say that despite Musk’s early missteps, his awkward habit of posturing in tweets and his decision to allow previously banned accounts to return to the service, Twitter has a chance to turn things around and keep winning back advertisers.
Mario Carrasco, co-founder and principal of ThinkNow, a Burbank, Calif.-based cross-cultural research firm, said brands should “proceed with caution,” although he said he felt advertisers would be “generally safe” on the service, with the DoubleVerify partnership bolstering the ability to monitor campaigns.
The participation of advertisers like HBO and Apple “signals to the market that Twitter is still a viable platform to target consumers looking for high-end brands,” Carrasco said.
“While Twitter’s reach is dwarfed by many other social media platforms, it does offer a more engaged user overall,” he added.
Musk’s takeover loaded up Twitter with $13 billion in debt and heavy interest payments. The company’s annual revenue in 2021 was $5 billion; Musk has said he expects Twitter to bring in $3 billion in revenue this year, given the uncertain economy and global instability. He also pledged to bring in a new CEO to run Twitter after running a poll asking Twitter users whether he should step down.
“If Twitter brings in another CEO to run the platform, that may be their best bet in winning back advertisers who have shunned the platform,” Carrasco said.
Advertising executives generally have “mixed feelings about Twitter,” Crystal Allison, VP of advertising operations at adtech firm Kubient, told TheWrap via email. Top brands, “especially those with big budgets and a media mix well distributed can afford to pull their ad budgets and wait and see what happens next. However, I believe it is an opportune time to promote a brand on the platform, possibly at a lower CPM, with deeper engagement.” She noted its “highly engaged user base” and a “popcorn meme” effect where Twitter could bring in new users curious about the fuss Musk has generated.
Pointing out that Musk’s zest for proving people wrong shouldn’t be underestimated, with respect to the $3 billion revenue target for 2023, Allison said she’d “be more surprised if he didn’t meet it then if he did.”
At one point, Twitter was projected to bring in $4.6 billion in revenue for 2022, but the economic downturn paints a grim industrywide outlook. “Digital ad industry is expected to slow in growth to something much more modest than what we’ve seen since the 2020 spike,” Allison told The Wrap.
