Elon Musk recently expressed optimism about the future of advertising on Twitter, stating that “almost all advertisers have come back” and suggesting that the company could soon achieve profitability. However, internal documents obtained by The New York Times paint a different picture.
According to these documents, Twitter’s U.S. advertising revenue for the period between April 1st and the first week of May was $88 million, a significant decline of 59 percent compared to the same period the previous year. The company has consistently fallen short of its weekly sales projections, sometimes by as much as 30 percent.
The challenges facing Twitter’s ad sales staff seem unlikely to be resolved in the near future, as highlighted by the internal documents and insights from current and former Twitter employees.
One concern raised by the ad sales staff is the presence of hate speech, pornography, and ads promoting online gambling and marijuana products on the platform. Twitter has projected a decline of at least 56 percent each week in its U.S. ad revenue for the current month, compared to the previous year.
Linda Yaccarino, who was recently appointed as Twitter’s CEO by Elon Musk, has inherited the declining ad sales and other related issues. Both Musk and Yaccarino declined to comment on the matter.
Twitter heavily relies on advertising, accounting for 90 percent of its revenue. Since Elon Musk acquired Twitter for $44 billion in October and took the company private, he had aimed to build a respected ad platform. Though some of his recent actions, including firing key sales executives, opening up speech regulation, and welcoming back barred users, alienated advertisers. As a result, several major brands and ad agencies, such as General Motors and Volkswagen, paused their ad spending on Twitter.
The New York Times also reports the company’s valuation has also suffered as a consequence. Musk previously estimated Twitter’s worth at $20 billion, down more than 50 percent from his acquisition price. Fidelity, a mutual funds giant with shares in Twitter, valued the company at $15 billion. This downward trend in valuation aligns with the company’s declining ad revenue.
While Twitter is exploring ways to make ad buying easier, including testing an automated system for deals outside the United States, it continues to face challenges. The company has seen growth in ad categories it previously avoided or prohibited, such as online gambling and marijuana products, though adult content and the presence of explicit material have become points of concern for the sales staff.