Morgan Stanley conference: Musk thinks he can fix Twitter’s ad business after derailing it
(CNN) Elon Musk on Tuesday offered an optimistic picture of how Twitter can improve its advertising business, helping to derail and boost its bottom line, while admitting that keeping the social network going is proving to be a challenge after several rounds of layoffs.
In remarks at a Morgan Stanley conference, Musk laid out his vision for growing Twitter’s core advertising business by adopting the standard strategy of most of the company’s peers: improving the relevance of the ads it serves.
“The advertising relevance is the most gigantic,”[ads1]; Musk said. “And this is going to sound completely bizarre, but Twitter didn’t consider relevance in advertising until three months ago.”
With this change, and greater cost-cutting across the organization, Musk said he believes Twitter has “got a chance to be cash-flow positive next quarter.”
“Going forward, Twitter will have very relevant, useful advertising,” Musk said. “And because it is useful, because it is relevant, there will be a massive increase in income, because it is now useful. So I am very optimistic about the future. It has been a very difficult four months, but I am optimistic about the future.”
Since taking over the platform in late October, Twitter has suffered a mass exodus of top brands as Musk relaxed some content moderation guidelines, reinstated fiery accounts and made a series of erratic remarks about politics and world affairs. Musk, who has previously tweeted about his hatred of advertising, quickly moved to bolster a paid subscription instead, but that has reportedly struggled to gain traction.
He also took time to thank advertisers who have stuck with Twitter through his rocky takeover, including Disney and Apple.
But even as Musk looks to grow Twitter’s ad business, which has long accounted for nearly all of the company’s revenue, there are genuine doubts about whether the platform can even stay online.
Twitter has been inundated with outages, including a significant service disruption on Monday, and other user headaches since Musk took over, likely related to several rounds of mass layoffs that occurred under his watch. On Tuesday, he blamed the “overly complex” underlying technology for some of the recent service disruptions.
“The code base is like a Rube Goldberg machine, and when you zoom in on one part of the Rube Goldberg machine, there’s another Rube Goldberg machine, and then there’s another one,” Musk said at the event on Tuesday. “So it’s pretty hard to keep this thing going, and then also hard to promote the product because it’s really far too complex, to say the least.”
“We will make a change, what appears to be a small change somewhere, which then causes a massive disruption,” he said. Musk said Monday’s outage was the result of “what was supposed to be a small change to 1% of the Twitter user base [that] ended up being a catastrophic change to 100% of the Twitter user base.”
At the same time, Musk continues to make controversial comments that may give brands pause about returning to, or increasing spending on, the platform. Musk was criticized by some this week after he publicly mocked a Twitter worker with a disability who asked the Twitter owner if he was laid off.
At Tuesday’s event, Musk went off on a number of unrelated tangents, including repeatedly taking aim at legacy media organizations. “What I would say to advertisers and brands is, you know, use Twitter yourself and believe what you see on Twitter, not what you read in the papers,” Musk said. “Because what you see on Twitter is the real deal, and what you read in the papers isn’t.”
