After Elon Musk’s antics on Twitter, advertisers may think twice for now

New York
CNN Business
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Hours before news broke Thursday that he had completed his $44 billion acquisition of Twitter, Elon Musk wrote an open letter to advertisers stressing that he does not want the platform to become a “free-for-all hell.”[ads1];

But that effort to appease the advertising industry, which makes up the vast majority of Twitter’s business, was quickly overshadowed by Musk’s first days as the new owner of the platform. Some industry experts are now predicting that an advertiser exodus could come sooner than expected.

In the first 24 hours of his ownership, there were multiple reports that racist comments, hate speech and other offensive content had increased significantly on Twitter as users tested Musk’s promise that he would allow “free speech” on the platform. Then over the weekend, Musk was widely criticized for tweeting (then deleting without giving a reason) a link to a fringe conspiracy theory about the violent attack on Paul Pelosi, the husband of House Speaker Nancy Pelosi.

“I think advertisers are preparing to leave,” said Claire Atkin, co-founder of adtech watchdog Check My Ads. “It’s possibly a seismic shift for marketers and advertisers.”

After months of uncertainty about Musk’s pending acquisition, advertisers must now confront questions about how Musk will change the platform, which is already an also-ran in the digital ad space despite its outsized political influence. Musk, known as both an innovative entrepreneur and an erratic figure, has vowed to overhaul Twitter’s content moderation policies and lift permanent bans on controversial figures, including former President Donald Trump.

Brands have long been sensitive to the types of content their ads run against, a problem made more complicated by social media. Most marketers cringe at the thought of running their ads alongside toxic content such as hate speech, pornography or misinformation. And if Twitter continues to struggle with an increase in such content—or if Musk updates Twitter’s policies to explicitly allow some of it—companies may stop advertising there for fear of risk to their brands, or because they reach a smaller audience if they are regular users also go.

“If you think about the money, the investment and the care, the real care and attention that goes into connecting with consumers, and then having your ad published next to lies … it goes against everything a brand wants to do ,” Atkin said.

Musk, who has previously tweeted “I hate advertising” and indicated that he wants to make the platform less dependent on it, also confronts the reality that roughly 90% of Twitter’s revenue comes from advertising. In addition to the open letter to advertisers, Musk’s team spent Monday “meeting with the marketing and advertising community” in New York, according to Jason Calacanisa member of Musk’s inner circle.

In public and private conversations with advertisers, Twitter has too stressed that the content guidelines have not changed since the acquisition, and Musk has so they won’t change until a new content moderation board is appointed (apparently to replace the company’s existing trust and security council).

But Musk may face an uphill battle. Twitter’s digital advertising business is much smaller than Meta, Google and Amazon, and does not have the growth and user demographics of TikTok. And many brands have already cut back on digital ad spending in recent months amid the economic downturn. It may not take much for brands to cut more.

General Motors (GM), which competes with Musk’s Tesla (TSLA), said Friday it would stop paying for advertising on Twitter while it evaluates “Twitter’s new direction.” CNN reached out Monday to more than a dozen other brands that advertise on Twitter, most of which did not respond. Toyota ( TM ), another Tesla ( TSLA ) competitor, told CNN it is “in discussions with key stakeholders and monitoring the situation” on Twitter. Ben & Jerry’s said that “at this time, we have not considered taking any action.”

On Monday, advertising giant Interpublic Group advised clients to pause advertising on Twitter next week as it awaits more clarity on the platform’s plans for trust and security and its capacity to carry out those plans under new owner Elon Musk, a person known with says the situation to CNN. The guidance was sent via an internal memo to IPG staff working with clients in Mediabrand’s ad buying arm, which includes major consumer brands including Coca Cola, Johnson & Johnson, Spotify, Unilever and more.

Also on Monday, the Global Alliance of Responsible Media, a leading consortium of advertisers and platforms including Twitter, published an open letter to Musk, urging him to ensure Twitter continues to align with the group’s standards, which designate hate speech, violence, harassment and insensitive treatment of controversial social issues as “not suitable for any advertising support.” In response to the letter, Musk said in a chirping, “Twitter’s commitment to brand safety remains unchanged,” and Twitter Chief Customer Officer Sarah Personette added that the company takes brand safety and its partnership with the organization seriously. (Personette tweeted on Tuesday that she resigned from the company last week.)

Also on Monday, Angelo Carusone, executive director of media watchdog Media Matters for America, tweeted urging major Twitter advertisers to “put pressure on Twitter right now” to better address the rise in hate and other toxic content. On Tuesday, a group of more than 40 civil society organizations, including Media Matters, the NAACP, GLAAD and the Center for Countering Digital Hate, sent an open letter to Twitter’s top advertisers asking them to stop advertising on the platform if Musk cuts back. about content moderation.

“Advertisers are very sensitive to the changing social media landscape,” Atkin said, adding that the question for Twitter now is “whether Elon Musk can continue to build trust with advertisers or whether he’s going to continue to sow uncertainty and fear.” ”

In response to a request for comment for this story, a Twitter representative pointed CNN to previous tweets from Musk and Personette and Musk’s letter to advertisers, as well as a tweet from Twitter Head of Safety and Integrity Yoel Roth noting that the platform’s policies had changed itself, although it faced an increase in hate content from mainly non-human accounts.

In a separate tweet thread Monday, Roth said that since Saturday, the company has “been focused on addressing the increase in hateful behavior on Twitter.” He added: “We have made measurable progress, removing more than 1,500 accounts and reducing views of this content to almost zero.”

An advertising executive told CNN on Monday that dozens of their clients had reached out in recent days seeking guidance on the situation.

“It seems like a reasonable time for advertisers to rethink,” said David Karpf, associate professor at the School of Media and Public Affairs at George Washington University. “I think advertisers are going to look at this and say, is the weak Twitter advertising product going to be a better or worse investment? And it’s going to be the same or a little bit worse … advertisers are certainly not going to start spending more on Twitter anytime soon.”

There is precedent for advertisers walking away from platforms because of hateful content. In 2020, dozens of brands publicly signed the #StopHateForProfit advertiser boycott of Facebook, which called out the platform for its “repeated failure to meaningfully address the massive proliferation of hate on its platforms.”

But when it comes to Twitter, brands may have to tread carefully to avoid backlash. After GM announced its Twitter advertising break, some users on the platform, including some right-wing political figures, have called for a boycott of the automaker.

Because Musk has positioned himself as a “freedom” maximalist, and one with strong support among many conservative politicians, brands risk being framed as anti-free speech if they leave the platform. But brands also risk appearing to implicitly endorse hate speech and other harmful content if they remain, meaning many may decide to pause advertising on the site without a formal announcement.

“Advertisers are finding it difficult to publicly weigh in on what is kind of a no-win position to take,” the advertising executive told CNN.