In the wake of Elon Musk’s highly publicized takeover of Twitter, advertisers have been leaving the social media platform in droves over fears of brand safety.
Companies from General Motors to Balenciaga have suspended their accounts on the site, which brings in close to 90% of its revenue from ads. In fact, data shows that over one-third of the platform’s top 100 advertisers haven’t placed ads on Twitter in the past two weeks. Let that sink in.
Before stepping in, Musk had tweeted that he wants to turn the platform into an “everything app” akin to China’s WeChat, which is effectively a mix of a social media site like Twitter, a ride-hailing app like Uber, a payments service like PayPal and an e-commerce marketplace like Shopify.
But without advertisers, will Musk be able to transform the platform in the way he hopes?
“Whatever Twitter is going to be is not what Twitter was — that I know,” remarked Eric Yaverbaum, CEO of public relations firm Ericho Communications.
Yaverbaum is a 40-year expert in crisis management. He has advised the Obama White House communications team, founded two communications companies and written seven books on the subject, including the best-selling book “Public Relations for Dummies.”
About half of Yaverbaum’s clients at Ericho advertise on Twitter. But the majority are pulling their money from the platform — and plenty of others are following suit.
“Anybody who’s staying is staying at their own peril at the moment,” he said. “This is what Madison Avenue is saying. It’s what the big advertising agencies are advising their brands to do.”
From an outside perspective, Yaverbaum thinks Musk has made several major missteps, chiefly the removal of Twitter’s old verification system. Earlier this month, the Tesla and SpaceX mogul rolled out a new system where users could pay $8 to receive the familiar blue checkmark next to their name, with no identification verification necessary.
Then, chaos ensued.
With both previously verified and newly “verified” accounts sharing the same blue checkmark, some users took advantage of the confusion to impersonate companies on the platform.
One user impersonating pharmaceutical company Eli Lilly wrote in a since-deleted tweet, “We are excited to announce insulin is free now,” quickly gaining thousands of likes and retweets. The same day, the company’s stock tanked, with many attributing it to the fake tweet.
Another user masquerading as Pepsi’s official Twitter account simply wrote “Coke is better,” while an account pretending to be Nestle said, “We steal your water and sell it back to you lol.”
The average Twitter user has probably gotten a laugh out of the satirical Tweets. But for advertisers, the platform has become a free-for-all — something Musk has explicitly said he wanted to avoid.
“What’s a blue checkmark mean anymore?” Yaverbaum said. “You got one; you don’t have one. You bought one; you didn’t buy one. You changed your identity; you didn’t change your identity. That is very confusing as far as having any idea of whether you’re getting good information.
“Twitter just opened the backdoor for everybody to come in and do whatever you want. You want to fake being somebody else? Now, all you’ve got to do is pay eight bucks for a blue check.”
Yaverbaum pointed out that some of Musk’s other moves might also be scaring off advertisers.
Throughout his career, he said, he has looked up to the billionaire businessman as an expert at communication. But he was disappointed — to put it politely — by the way Musk handled the reduction of Twitter’s workforce.
“If he was trying to trash the whole system, it would look a lot like what he’s doing right now,” Yaverbaum said. “I don’t know what his play is. But he’s a smart guy, so he must have one.”
Since Musk took ownership of the platform, Twitter has lost nearly 70% of its workforce, going from about 7,500 employees the day of the takeover to close to 2,300 after the most recent round of layoffs last week.
Layoffs have swept the technology industry in recent months as the economy slows, but Musk’s tactics have drawn extra criticism just about every step of the way. He came under fire for terminating thousands of employees via email at the start of the month and was further lambasted for giving the remaining workers an ultimatum: work “hardcore” hours or take a three-month severance package.
That, Yaverbaum predicts, is killing the buzz at the office and creating further uncertainty for advertisers that worry about the platform’s performance.
Watch: Latest Elon buying Twitter drama
All of this is to say that Twitter is far, far away from becoming the “everything app” Musk envisioned, complete with a robust e-commerce arm. But is there still a possibility it could happen?
“No, not in the short term there’s not,” Yaverbaum said bluntly. “In the long term there is.”
One factor working against Musk is the timing of the crisis. Yaverbaum pointed out that with the holidays approaching, no advertisers want to risk having its ads go to waste during such a critical period. And until they understand what the new version of Twitter will look like, the assumption is that that’s exactly what will happen.
“When you’re paying this much money, and you’re investing so much in your ad campaigns, you’re not going to be taking it to a platform that you don’t understand,” he said. “It would be like me creating a television network today that nobody knew anything about and charging a million dollars a minute [for advertising time].”
Another headwind is that normal users — not just advertisers — are leaving Twitter because they no longer feel they can trust the news they consume on the platform.
Over the years, millions of users have begun looking to the site as their primary source for news. Yaverbaum remembers witnessing the landing of U.S. Airways Flight 1549 on the Hudson River near New York City on Twitter before seeing it covered on major news networks.
But without a reliable verification system, Twitter can no longer play that role. And fewer users — or less trustworthy ones — makes commerce on the platform a tough sell.
“That’s the day that I knew Twitter was the match that lights the news cycle,” Yaverbaum said. “It starts on Twitter and it goes everywhere else. But right now, it’s a total free-for-all. Nobody wants to do commerce in a free-for-all.”
Yaverbaum theorized that perhaps Musk has a larger plan in mind. The communications executive noted that Twitter has never been profitable despite being publicly traded, so Musk’s overhaul of the site could be a bid to find new revenue streams and reduce its reliance on advertising.
Aiding that argument is the trimming of Twitter’s workforce and the removal of certain applications, cost-cutting measures that could signal a push toward short-term growth.
But the timing of all of this worries Yaverbaum.
“I would not want to have my platform taken out of the marketing mix for advertisers right now,” he said, alluding to the impending holiday season. “It seems like really awful timing,”
Add to that the fact that Musk has been selling Tesla stock to keep Twitter afloat, and things are looking rather bleak on the surface.
However, if Musk is able to recover some of Twitter’s advertisers in the long term, the platform could be very well positioned to launch a large e-commerce business. With hundreds of millions of users held captive by a constant stream of content, the space is rife with potential for retailers to reach customers, similar to the way TikTok operates its TikTok Shop marketplace.
“I do think the old Twitter was in a very good position to do all sorts of things,” Yaverbaum said.
One thing Musk can do to get Twitter back on track is establish a new public relations team. Within days of taking over, he sacked the company’s communications department and essentially made himself the point person for the media, a strategy of which Yaverbaum was critical, to say the least.
“I’ve represented a lot of people a little bit like Elon. … They do have at least a top communications person, and I have been that person many times, who they listen to,” he said. “I don’t even think he has that.”
This is nothing new for Musk, who is notorious for his high-activity level on Twitter and has repeatedly impacted Tesla’s stock price with his posts. Now, though, he may have taken things a step too far.
“Elon dictates the story every day,” Yaverbaum said. “Look at Tesla. Elon just decides how that’s gonna go on any given day. He decides when he wants to be in the news. None of that’s accidental. He’s doing that all intentionally. This one? It’s not a good look.”
Yaverbaum, who cites Musk as an influence in his work in communications and crisis management, is holding out hope the new Twitter boss has a few tricks up his sleeve. But as things stand, the site is suffering with Musk as its PR lead.
“My guess is he thinks he’s better at it than anybody who does it for a living,” Yaverbaum said. “I can tell you from what I’m watching right now, for the very first time in my life: Elon, you’re not better. You’re messing up.”