Elon Musk is looking for advertisers. And quick.
Thanks to heavy interest payments on $13 billion in takeover-related debt and a 50% plunge in ad revenue, Musk’s company continues to bleed cash even after he sacked roughly eight out of every 10 Twitter employees and stopped paying his bills or rent in many cases. And with cash short, he may have to delay realizing his grand vision of transforming Twitter into an everything app that rivals China’s WeChat.
So his first order of the day is to lure advertisers back to a platform that has seen so many changes under his controversial stewardship that it’s scarcely recognizable from the microblogging service Jack Dorsey helped found 17 years ago. Even the name and its familiar blue bird are now history.
To lure back ad buyers, the new owner—famous for his companies’ staunch opposition to spending money on ads that could instead go toward product development—is now courting companies to place spots with a hefty price cut.
Companies can get up to half the cost for certain new bookings made, according to a report on Tuesday by the Wall Street Journal. Advertisers wanting to take advantage must act now, because the offer is valid only through the end of this month—at least, up until the next time X cuts ad prices. According to the WSJ, it made a similar offer during this year’s Super Bowl.
“The goal of these discounts is to help our advertisers gain reach during crucial moments on Twitter such as the Women’s World Cup,” read one email cited by the business daily.
Just to ensure companies open up their pocketbooks, Musk has a different form of encouragement in mind as well.
The email seen by the WSJ warns that firms that haven’t spent at least $1,000 over the previous 30 days—or $6,000 over the past 180—will have to say goodbye to their gold-colored verification badge, for which they already pay $1,000 per month.
Problems at rival Snapchat provide a helpful alibi
Musk did not deny the report and even justified the high monthly fee since it makes it “expensive for scammers to create millions of accounts,” he wrote late on Tuesday.
How much this actually helps protect brands, as he claims, remains unclear. It’s easy to find impostor accounts on the platform that buy blue checks from the tycoon complete with thousands of fake followers in the hopes of fooling users.
Musk’s drought in ad spending comes despite his frequent assurances that the platform’s own metrics show record user engagement. This is however difficult to verify, and his own engineers at Tesla have admitted under oath he put them up to doctoring a key promotional video.
Whether the engagement stats Musk cites are true or not, companies have reason to be cautious since they typically prefer predictability when it comes to their investments—a trait Twitter has lacked ever since the Tesla CEO bought the company in late October.
Instead he has torn up the Twitter operating manual and not only made rules up on the fly, but also injected his personal politics in the process. Last month he showcased a film deemed transphobic that cost him the resignation of his head of safety, before later declaring the word “cis” to be a punishable slur when used pejoratively.
Musk fortunately has in Evan Spiegel’s Snapchat an alibi for all his troubles at X—at least for the moment. The app first known for sexting and later for its bunny-ear photo filters is proving X is not the only social media platform to struggle commercially.
Spiegel’s $20 billlion parent company, Snap—worth roughly the same as Twitter according to accountants at Cathie Wood’s ARK Invest—revealed a second straight disappointing sales quarter that is now expected to pressure the stock.
A more accurate estimate of digital ad spending on social media platforms comes later today when Mark Zuckerberg’s Meta posts quarterly results after the close of markets.
Musk, who enjoys a record of succeeding where others have failed, is sticking to his guns for now.
“X will become the most valuable brand on earth,” he predicted on Tuesday, in words that were not necessarily met with universal enthusiasm among fans of his other company, Tesla, who fear they are losing out to his newest project.
While the future for the erstwhile Twitter platform may indeed yet prove rosy, it’s the present that remains a challenge.
