It now appears that Elon Musk has had a plan to bury the Blue Bird in his quixotic “everything app” X vision ever since litigation forced him to buy the company last year at a price that vastly overvalued the troubled social media platform. Still, the abrupt decision to end the Blue Bird’s career conveyed a sense of capitulation, a step forced by deteriorating business conditions.
Musk had previously reported that Twitter revenue had fallen 50%, particularly bad news for a company that owes about $1 billion annually in interest payments on the debt used to finance the acquisition. On June 5th, Musk took steps to lure advertisers back when he brought on Linda Yaccarino, the former advertising chief at NBCUniversal, as Twitter’s new CEO. The question remains if the company can make progress on convincing advertisers to come back to Twitter.
But luring advertising dollars to the platform isn’t an easy feat, as it faces claims from the Center for Countering Digital Hate, a nonprofit organization that monitors hate speech and disinformation, that it had failed to act against 99 of 100 posts flagged by staff members that included racist, homophobic and antisemitic content. Now, X Corp. is suing the Center for Countering Digital Hate for orchestrating a “scare campaign to drive away advertisers from the X platform.” According to NBC, the complaint filed in San Francisco Federal Court accuses the nonprofit group of violating federal computer fraud law, intentional interference with contractual relations and inducing breach of contract. Conversely, French publication Agence France-Presse (AFP) sued X over its “clear refusal” to discuss potential payment for the distribution of the news agency’s content mid last week, per Quartz. The company is already surrounded with lawsuits, and it would not be surprising if there are more on the horizon.
Then, of course, came the launch of Threads by a well-funded rival. With a large user base on its existing social media platforms and strong digital ad capabilities, Threads has seen more than one hundred million sign-ups since its launch on July 6th. While sign-ups are slowing down, marketers are beginning to launch campaigns on Threads. Chipotle recently announced a National Avocado Day promotion, marking the first time a major restaurant brand has hosted a sweepstakes on the Threads platform.
For marketers, the shift from the Blue Bird to the darker, enigmatic X logo, may only underscore that the main risk of the platform is the radical uncertainty of its future under its mercurial owner. Musk failed to develop a meaningful stream of subscription revenue through a clumsily imposed verification fee. While some advertisers have returned to the platform, many big names with sizable budgets remain on the sidelines. Clearly, Musk would prefer to build a business with multiple streams of fee revenue (think WeChat and PayPal) rather than being dependent on ad buyers.
As we head into the Fall and 2024 planning begins, there are three fundamental questions advertisers need to monitor for:
- X user count and engagement: Users seem to have reacted along predictable lines. Musk fans hailed the new X identity (though it remains undefined), while other users complained and threatened to abandon it. It will be a while before the impact is clear.
- Threads progress: After racking up an astonishing number of inaugural accounts, Threads’ user engagement retreated significantly in the following week, a patten social media analysts said is normal. Now the question is whether Threads can add the features needed to build user engagement and sustain its growth. And while they do, will other companies follow Chipotle’s lead and begin to include Threads in their marketing initiatives? Meta says it’s not in a big hurry to monetize Threads activity through advertising at this stage, but it has significant opportunity to do so in the months ahead.
- Will X’s new CEO Linda Yaccarino succeed in winning over some large ad accounts? The highly regarded ad executive made some rousing but vague posts hailing the debut of X, but the next few months will likely determine whether Yaccarino stays in her role under the platform’s notoriously impatient owner. She’s spent recent weeks trying to convince ad buyers that X’s “adjacency controls” will wall off their ads from toxic content, a major issue for marketers. As mentioned, what might work against her is that a few recent independent research pieces in prior weeks said “hate speech” on Twitter (now X) was on the rise.
In a move that underscores X’s fragile state, Yaccarino has reportedly offered brands a big carrot in the form of 50% discounts on advertising in selected formats. But X also wielded a big stick, warning that advertisers that don’t meet certain spending minimums could lose their brand’s gold check mark verification on the platform.
It remains to be seen where all of this is going, but it will be important to keep an eye on announcements from X, as well as Threads, in the coming weeks. As more stories develop, we will stay informed to identify the opportunities and potential threats of engaging and advertising on each platform.
