“And no ads,” Musk said. “The power of corporations to dictate policy is greatly enhanced if Twitter depends on advertising money to survive,” Musk explained.
With those words, marketers, advertisers and affiliates heard the words they dreaded the most.
Twitter’s revenue surpassed $5 billion last year, a 37% year-over-year increase, and the company is projected to reach $7.5 billion in revenue by 2023, according to Hootsuite. Of that $5 billion in 2021, $4.5 billion was generated by advertising, with the remainder coming from data licensing, Statista reports.
It could mean Twitter moves to a subscription-based model to make it less reliant on advertising dollars and enhancing Twitter’s platform for commercial entities for tasks like hiring rather than a mostly consumer platform, he said.
However Mark Reid, CEO of WPP, the world’s largest advertising communication group, said in an interview on Wednesday that Musk’s plan for Twitter may improve the company’s service, which is subject to WPP customers. However, he doesn’t think Musk will cut off Twitter’s ad revenue stream.
According to CNBC, “If Twitter were to exit the advertising industry altogether, we would view that as a slight positive for the rest of our coverage, as the roughly $7bn in advertising dollars Twitter was likely on track to generating in 2023 would shift to other platforms like Facebook and Snap.”
However, some think this is ridiculous idea: “If you convert TWTR’s business model from advertisers, who generate 93% of $TWTR revs, to DAUs paying monthly fees, TWTR would have no profits,” commented Gary Black, who is a Tesla investor. “There aren’t enough users who will pay monthly fees to use TWTR.”
Will Twitter Ditch Advertising under Musk?
