Those relationships are especially important because Twitter’s ads aren’t as performance-driven as Google’s or Facebook’s. When a pharmaceutical company like Eli Lilly & Co. buys space on Google, its ads show up in search results related to a medical issue.
But on Twitter, brands buy ads to promote and create general awareness about their products. Of course, Eli Lilly has less incentive than ever to buy ads on Twitter after a parody account with a blue badge went viral this week.
Musk himself has admitted that Twitter is “vulnerable” because “70% of our advertising is brand,” according to a memo he sent to employees. That memo cited economic risk but didn’t mention that brands might balk just as much at a botched product rollout or the billionaire’s erratic behavior on the site, such as tweeting a conspiracy theory about the attack on Paul Pelosi or tweeting that Americans should vote for the Republican Party during the midterms.
Musk’s efforts to fix his relationship with advertisers hasn’t gone well either. On Thursday he held a public Twitter Spaces call — a live audio discussion that anyone on Twitter can listen to — with dozens of major brands like Warner Bros. Entertainment and Nike Inc.’s Jordan. Offering his assurances that Twitter was making sure there was “no bad stuff” next to ads, he said that Twitter was also working on helping to make ads more relevant and targeted toward users.
While Musk didn’t elaborate on how Twitter would do that, in a separate meeting with employees on Thursday he said the company would combine the technology powering its recommendation engines for ad and tweets, which until now have operated separately.
Yet this is precisely what the company’s departing lawyer warned against: Twitter can’t forge ahead with new products that process user data without special sign-off from the FTC. The regulator has said it is tracking recent developments at Twitter with “deep concern.”
Musk may go ahead with his plans anyway. He hasn’t only “put rockets in space,” as his lawyer said, but gotten slaps on the wrist and little else from the Securities and Exchange Commission for his previous transgressions.
That won’t stem the flow of losses to come as advertisers, who really don’t need Twitter as much Twitter needs them, take their money elsewhere. On Thursday, amid the mayhem, Musk was touting the rise of active users on his site.
"Usage of Twitter continues to rise,” he tweeted. “One thing is for sure: it isn’t boring!” But it might not be around for long.
Parmy Olson is a Bloomberg Opinion columnist covering technology. A former reporter for the Wall Street Journal and Forbes, she is author of “We Are Anonymous.”