Micro-blogging site Twitter has now got a new name ‘X’, as part of a branding transition.
Twitter’s new CEO Linda Yaccarino stated, “Powered by AI, X will connect us all in ways we’re just beginning to imagine. We’ve already started to see X take shape over the past eight months through our rapid feature launches, but we’re just getting started.”
However, today International Finance will talk about a topic that, in the coming days, may become the central theme of Twitter’s rebranding efforts.
Is ‘Revenue Generation’ The New Theme?
A recent Wall Street Journal report stated about the micro-blogging platform now offering advertisers in the United States and the United Kingdom a 50% discount on video ads running beside trending topics under the platform’s “Explore” tab, “among other discounts.”
From August 7, brands need to spend at least USD 1,000 on advertisements within the prior 30 days or USD 6,000 in the previous 180 days to retain the gold checkmark, a checkmark that identifies that the account belongs to a verified brand.
Also, Twitter has introduced a new ads revenue sharing program for creators to help people earn a living directly on the micro-blogging platform. Content creators will now be able to earn a share in ad revenue starting from replies to their posts.
This revenue-sharing programme will also be applied to ‘Verified Organizations’ or ‘Twitter Blue Subscribers’ with at least five million post impressions in each of the past three months.
Sad state of financial affairs
In July 2023, Elon Musk informed about cash flow remaining negative in the popular micro-blogging platform, as it was witnessing a nearly 50% drop in advertising revenue and a heavy debt load. These developments have derailed the tech billionaire’s hopes of making Twitter a cash-flow-positive entity by June.
Elon Musk also said in another tweet that Twitter did not see the expected increase in advertising revenue in June. Twitter Spaces too is witnessing a poor run of revenue generation.
Twitter has reduced its non-debt expenditures to USD 1.5 billion from a projected USD 4.5 billion in 2023. Twitter also faces annual interest payments of about USD 1.5 billion due to the debt it took on in the USD 44 billion deal that turned the company private in October 2022, as per a Guardian report.
Elon Musk, however, remarked that Twitter was on track to post USD 3 billion in revenue in 2023, down from the 2021 figure of USD 5.1 billion.
Recently, a CNN report stated that over half of Twitter’s top 1,000 advertisers were no longer spending on the platform in the first weeks of January 2023.
Monthly revenue from these advertisers plummeted by over 60% from October 2022 through January 25, 2023, from around USD 127 million to just over USD 48 million. Before Elon Musk’s takeover, the same entities used to pump USD 4.5 billion worth of yearly revenue into the micro-blogging platform.
Twitter reportedly offered a Super Bowl “fire sale” deal for advertisers. It also partnered with a third-party “brand safety” firm, which would show advertisers if their ads appear alongside inappropriate/unsafe content on Twitter.
However, none of these worked. After Linda Yaccarino took over the leadership reigns of Twitter in June 2023, she too signalled that ad sales were a priority for her venture amid efforts to increase subscription revenue. Twitter is now reportedly focusing on video, creator and commerce partnerships and is in talks with public figures, payments services, and media outlets.
After taking over Twitter’s helm in October 2022, Elon Musk sold verified checks as a part of ‘Twitter Blue Subscriptions,’ However, the move backfired as “verified” accounts parodying brands occupied the micro-blogging space, thus making the platform a ‘High-Risk Zone’ for businesses.
Elon Musk has also introduced limits on how many posts people can read, with verified users receiving preferential treatment to see more tweets. As per the Wall Street Journal, this limitation has resulted in fewer people seeing ads, thus causing advertising prices to rise, as the brands are bleeding due to a reduced audience reach.
The Threads challenge
Amid the financial mess around Twitter, the Mark Zuckerberg-led Meta introduced its ‘Threads’ in July 2023. The app has features similar to Twitter. Threads reached 100 million downloads in the first five days of its launch, breaking records for the explosion of sign-ups on any app ever.
Threads is now taking advantage of its connection with Instagram and Meta to attract advertisers. It is offering various ad formats, like sponsored threads, promoted replies, and branded stickers. The app is also experimenting with new ways of monetizing content, such as tipping, subscriptions, and e-commerce.
If the app manages to retain users, Threads could achieve USD 5 billion in annual ad revenue by 2023 end, equalling Twitter’s 2021 earnings, wealth management firm Bernstein stated. Morningstar analysts predict that Threads could add between USD 2 billion and USD 3 billion to Meta’s revenue every year between 2024 and 2027. Evercore ISI analysts believe that Threads could generate annual revenue worth USD 8 billion by 2025.
Mark Zuckerberg, however, has said his company would only think about monetizing Threads once “there was a clear path to 1 billion users”.
Twitter had nearly 240 million monetizable daily active users as of July 2022. So Threads has a long road ahead.
Meta has been investing to upgrade its AI capacity to boost traffic to Facebook and Instagram and increase ad sales. Even though Threads lacks features like direct messaging, hashtags or keyword searches, expect these to be added to the app in the coming days, which in turn, will increase its appeal to advertisers further.
Taylor Michelle Gerard, a senior executive at content marketing firm Blue Hour Studios, told Reuters some of her clients are considering adding a Threads post along with TikTok or Instagram posts as part of sponsored deals with influencers.
Elon Musk has dubbed X as an ‘everything app’ that will enable messaging, payments and banking. However, his way of running Twitter’s affairs has been an amateurish one. The changes which he has introduced in the venture since October 2022 have been short-sighted and chaotic.
What Elon Musk and Linda Yaccarino need to understand is that more than the rebranding gimmick, Twitter’s time and efforts need to be invested to consolidate its market position against potential rivals like Threads and Bluesky. A good brand thrives on the back of administrative stability, which Twitter lags right now.