It’s been close to just three months since Elon Musk took the helm at Twitter, and his tenure has been rocky to say the least. His first month in charge featured mass layoffs, a new revenue stream that led to widespread imitation, and the CEO at one point even locked the doors to the company’s San Francisco headquarters.
As a result, Twitter is being sued by former workers over complaints that the quality of service is increasing, reporting cash flow problems and brands weighing up whether or not to be active on the platform at all. An imitation of the pharmaceutical company Eli Lilly got e.g. share price to fall after a fake account with a paid blue cross said it would provide free insulin. The rocky start has also thrown ad spending — Twitter’s main source of revenue — into doubt, with major companies holding back cash due to the growing volatility.
The rise of social media was once seen as a new dawn for communication and marketing, giving brands the tools and channels to reach customers directly. Turbulence on Twitter, however, along with the ups and downs of platforms like Instagram, Facebook and TikTok, means that brands may need to explore how they can evolve beyond social media for good.
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The shake-up of Twitter and its policies, particularly around content moderation and free speech, has caused brands to rethink their stance on advertising through the platform, said Madeleine Sampson, telecommunications, media and technology analyst at Fitch Solutions.
“Companies such as General Motors, Audi, VW and Pfizer have all paused advertising on the platform and taken a ‘wait and see’ approach,” she says. “Apple has reportedly cut its advertising spend on Twitter, received significant public criticism from Elon Musk, and brands risk criticism for ending their association with ‘free speech’ or pursuing a ‘woke agenda.’
“All this comes at a time when brands are already reining in their marketing spend due to inflation and the rise in operating costs. As a result, big tech is suffering significantly from the drop in ad demand over the year.”
Financials aren’t helping the advertising business Twitter relies on, and neither are Musk’s erratic management style or the platform’s declining quality. Users have reported that the platform may crash completely, and anyone who says they can predict what will happen in the future is — as Rebecca Wettemann, CEO of industry analyst firm Valoir says — “full of it.”
“I think a lot of CMOs have been pulling their hair out over the last month as they try to figure out what happens next,” she says. “We see a number of challenges for brands and marketers as they think about how to reach customers. Twitter is part of that, and concerns about Twitter are part of that.
“But we also have to think about what happens with cookie opt-out and the other challenges marketers have in trying to achieve this goal of being able to create one-to-one, personalized experiences for the customers.
“In the short term, we’re certainly seeing budgets pulled back for Twitter, but we’re also seeing companies looking at the other tools and technologies out there to help them understand what value they can get from Twitter versus other sources.”
Brands are falling in love with social media
The question for brands could reasonably shift from debating how big of a presence they should have on platforms like Twitter – to asking them whether it’s even worth having a presence on popular social media platforms given the risks involved. That’s especially true given the old adage about companies craving long-term security.
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One of the many roles Twitter plays is acting as a point of contact for frustrated customers. When all else fails, after being run around in circles by chatbots or spending half an hour on the phone, calling brands on Twitter is a regular occurrence.
Add to this the problem of Twitter pile-on, where sections of users rally against a brand or person, and companies can feel like they are between a rock and a hard place. However, Chris Bignell, founder of XL Communications, says a coherent communications strategy could avoid this and that companies are being called out because people feel they have nowhere else to go.
“It’s very easy for brands to get called out on Twitter, and I think that’s why the public has kind of jumped on it, because it’s a way to publicly vilify a company,” he says. “But I think most people turn to Twitter because they get an answer. This has led to companies moving their call center staff to Twitter instead of answering phones, which means that by publicly shame a company, the customer is likely more likely to get a faster result.
What comes after social media?
As Bignell alludes to, the challenge with Twitter at the moment is not just down to the way it is run, but in maintaining the ways that brands rely on to communicate directly with customers. Wetteman says it would help ease their dependence on Twitter if they join the communication channels, whether it’s via email, phone, social media or through their own website. Many brands have more to learn when it comes to customer interaction, she adds.
“There is a lot of interaction that happens before a ‘one-to-one’ communication, and some of the really interesting and innovative things that I see are around the use of artificial intelligence (AI) to understand, not only when a customer creates that one-to-one communication, but what happens way before that,” she continues. “Companies want to understand what customers are searching for, their activity on community sites, their activity on the website, for to gain a better understanding of what they need to do to make a customer happy, rather than just what their interaction might be with a chatbot. “
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As brands look away from social media, the question of what comes next still begs the question—whether it’s another dominant social media platform or Twitter alternative, or something entirely different, like a metaverse-based experience.
Things don’t seem to be improving for Twitter anytime soon. As Sampson points out, a hiatus in advertising isn’t good for Twitter’s profitability, on top of a user base that could be declining. “About 90% of Twitter’s revenue comes from advertising, but the introduction of the Twitter Blue subscription service, as an attempt to build new revenue streams, could make advertising take a back seat and become less relevant to advertisers in the long term.” she says. “Musk stated that he wants to create ‘the most respected advertising platform in the world,’ but it is too early to say what the result of Musk’s overhaul will have on the number of Twitter users, which is one of the reasons why some companies are biding their time. before a final decision is made.”
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