Twitter is facing a deeper financial crisis as advertisers turn their back on the microblogging platform, despite new owner, Elon Musk’s claim that more users have joined the platform since he took over late last year.
According to a report by The Information on Wednesday, more than 500 of Twitter’s advertisers have paused spending on the platform since Musk’s takeover. This means that the company’s daily revenue has significantly dropped compared to 2022 before Musk took over.
The Information, citing a person familiar with Twitter’s ad business, reported that the social media company’s daily revenue on Jan. 17 was 40% lower than the same day a year ago.
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The drop in Twitter’s revenue, which was first reported by technology newsletter Platformer on Tuesday, was 40% year-over-year. Advertising accounted for Twitter’s $5.1 billion revenue in 2021, but has seen a downturn, which was exacerbated by Musk’s acquisition bid in 2022.
Clients like Audi, Pfizer and Coca Cola have paused advertising on Twitter following the changes introduced by Musk. Their decision was fueled by concerns about an increase in hate speech on the platform.
Musk’s ‘free speech’ mantra, which has seen several banned accounts, including former US president Donald Trump, reinstated, is another cause for concern to advertisers. The advertisers said they are pausing spending to see what direction Musk takes with the platform. This is against Musk’s claim that activist groups, who he accused of “trying to destroy free speech in America”, were pressuring advertisers.
Musk had promised to uphold Twitter policies on hate speech and cyberbullying, but had backtracked, dissolving the platform’s content moderation team. Twitter recently reversed its 2019 ban on political ads and said that it would relax advertising policy for “cause-based ads” in the United States and align its ad policy with TV and other media outlets, per Reuters.
This has created further concerns that he will scale back misinformation and security protections on the platform.
Instead of working the concerns out, Musk has opted to generate income for Twitter by monetizing verification. In October, the Tesla and SpaceX CEO announced plan to charge as much as $20 per verification badge. The price was later reviewed downwards to $8, following a poll he conducted asking users how much they would pay.
However, the decision to monetize Twitter verification unleashed chaos as impersonator accounts flood the platform, forcing the company to halt the plan. Musk said the blue tick scheme for verified users will be relaunched after he figures a way to deal with scammers’ impersonation.
With the verification scheme chaos, Musk’s plan to create an alternative revenue stream for Twitter was scuttled. Advertisers are parting ways with Twitter as the chief executive is still bent on his absolute free speech-based idea of running the social media company, forcing its revenue to nosedive.
Fall Behind on Office Rent Payments Forces Twitter to Auction Some Equipment at Headquarters – by Ojukwu Emmanuel
Meanwhile due to lateness on rent payments, Twitter is auctioning some equipment at the company.
Several reports disclose that Twitter has allegedly failed to pay rent at offices around the globe, including their San Francisco HQ,
A representative of Heritage Global Partners, the company which is currently handling the auctioning of some of Twitter’s equipment, Nick Dove, however, told Fortune magazine that the sale had nothing to do with recouping costs for the $44bn purchase.
In his words, “If anyone genuinely thinks that the revenue from selling a couple of computers and chairs will pay for the mountain there, then they’re a moron”.
Twitter is currently auctioning off its computers, Kegerators, espresso machines, and oversize neon displays that come along with the company’s logo which is currently bidding at $17,500.
Also, the company’s kitchen supplies are not left out as they include a rotisserie cooker, multiple refrigerators, and pizza ovens, while some of the office equipment includes numerous televisions, desks, and conferencing gear which are all up for sale.
Buyers who are interested in the equipment can visit the website of Heritage Global Partners, which is currently conducting the auction.
Reports disclose that these sales at Twitter were necessitated as the company is trying to cut costs while going through a financial crisis.
Ever since Musk took over as CEO of the company, he has been constantly looking for ways to cut costs, as well as increase the company’s revenue. He has also ended most of Twitter’s perks, such as free meals.
Recall that when he acquired the company for $44 billion in October, he laid off thousands of workers while some left at their own volition, citing Musk’s unpredictable nature and a rigid workplace.
Last November, Musk tweeted that the company had seen a “massive drop in revenue” following the departure of several advertisers, although in late December he reportedly said it was no longer in the “fast lane” to bankruptcy.