How Musk’s Twitter Purchase May Change The Game For Advertisers

Elon Musk’s ownership of Twitter is set to change many things – digital advertising is one of them

On April 25, 2022 Twitter announced that tech billionaire, Elon Musk purchased Twitter for $44 billion USD. There has been fierce criticism about Musk’s decision to purchase Twitter. One of the areas people are most concerned about is how Musk’s ownership will affect Twitter’s advertising revenue which accounts for 90% of its $5 billion annual revenue. Musk has been a vocal critic of paid advertising across Twitter, and brands who advertise on the platform are now worried.

Time Magazine reported that, in a now-deleted Tweet, Musk argued for the removal of all ads from Twitter. The Tweet read, “The power of corporations to dictate policy is greatly enhanced if Twitter depends on advertising money to survive.”

So what will paid advertising look like under Musk’s ownership? Let's take a look at some possible scenarios.

Scenario 1: Advertising space on Twitter decreases

In another Tweet, Musk revealed that he plans to move Twitter to a subscription-based model as a means for the company to generate revenue.

Twitter already has a subscription service, Twitter Blue, where users pay $3 a month to access premium features. Some experts and former company stakeholders think that Twitter will switch to a subscription-based model in order to replace advertising revenue

It’s unclear if Twitter will go completely adless. Justin Buchbinder, global head of social media at FINN Partners told USA Today, thinks there may still be advertising opportunities for brands.

“It will likely end up like Spotify, whose current user base includes 45% paid Premium subscribers, with the other segment accepting advertising instead to keep from paying,” he told USA Today.

Scenario 2: Twitter becomes a less important place for advertising

Musk's decision to quash advertising on Twitter could lead to brands redirecting their paid advertising budgets to TikTok, Snapchat, and Instagram. This could also lead to more brands looking to other platforms such as Pinterest and Reddit.

One of the things Musk wants to do is to allow for more free speech across the platform, which for many advertisers is concerning. With an increase in unmoderated content, many brands are concerned their content could appear next to hate speech. This may motivate brands to take their paid ad budgets elsewhere.

Scenario 3: Advertisers may be encouraged or incentivised to use crypto to purchase advertising space.

Musk is a known cryptocurrency enthusiast and has previously teased at integrating his favourite crypto-currency, dogecoin into Twitter. He has even suggested using it as a way users would pay for Twitter Blue. In July 2021, Musk asked Twitter’s then CEO Jack Dorsey, if he would accept bitcoin as a form of payment from advertisers, Dorsey didn’t provide a clear answer. Since his departure from Twitter, Dorsey is the Head and Chairperson of decentralised cryptocurrency startup Block – formerly known as Square.

With Musk now at the helm of Twitter, and once legal and regulatory obstacles are overcome, brands may be encouraged to use cryptocurrencies to advertise across Twitter. Tesla currently accepts dogecoin payments, therefore it is likely Twitter will soon. It will also be interesting to see what happens with the NFT (non-fungible token) roll-out on the Twitter platform. But that’s for another story!

If Twitter chooses to introduce crypto payments, it could cause a ripple effect across other social media platforms. The Pistol’s Strategy Director, Shaunn Anderson explains:

“This could open up a whole new world of payment gateways and value transfer for advertisers alike, and potentially the big players like Meta may adopt a similar approach in accepting crypto as a payment option for advertising... BUCKLE UP."

How to prepare for Twitter’s uncertain future

Right now, there are still many unknowns about what Musk’s Twitter will look like. However, if your brand has previously relied heavily on Twitter advertising, as a precautionary measure – diversifying your omnichannel marketing strategy is critical.

For Australian brands, Twitter has one of the most cost-effective ways to build brand awareness campaigns. Anderson, who is also a specialist in lead-generation technology states that Twitter advertising is great for, “generating cheap CPCs and providing effective lead generation solutions at scale with its new conversion campaign capability.”

Diversification will be key for advertisers in 2022 and beyond and now more than ever it’s important to not solely rely on one big platform to do all of the magic.

At The Pistol, we’ve developed omnichannel strategies for some of the world’s largest brands — we can help build yours. Contact us today to start building your omnichannel strategy.

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