What Advertisers Should Know About Elon Musk’s Twitter Takeover

Tesla's stated mission to protect "free speech" is already notorious for its toxicity, preparing for a looser content moderation policy.

Elon Musk makes a lot of jokes, but the Tesla and SpaceX founder appears to be serious about shaking up Twitter. Following weeks of dramatic events, including the unusual adoption of a "poison pill" defense by shareholders and, of course, plenty of tweeting, the executive announced on Monday that he had reached an agreement to buy the social media app for $44 billion. It's one of the most significant and unusual deals in tech history, and it'll test whether companies are comfortable operating in an environment overseen by someone known for his fiery personality.

The world's wealthiest people nodded to the desire to protect Twitter's language and prioritize communication with legitimate accounts in a press release announcing plans to keep the platform private.

"The foundation of a functioning democracy is freedom of speech, and Twitter is a digital market where important issues for humanity's future are discussed," Musk said in a statement.

Mixed signals for advertisers

The proposed acquisition, which has received unanimous board approval, is expected to close this year and is still subject to regulatory and shareholder approval. Advertisers are also given mixed messages. His "free speech" crusade, on the other hand, may rekindle concerns about brand safety.

Brand managers have previously slammed Twitter for being toxic. Further opening the discourse floodgates may push some people to their breaking point at a time when they have plenty of other options. Insider Intelligence predicts TikTok's ad revenue will triple this year to $11.64 billion, surpassing Twitter and Snapchat combined.

In response to the news, Forrester research director Mike Proulx and principal analyst Kelsey Chickering wrote a blog post entitled "If Elon decides to loosen content moderation policies, he puts Twitter ad dollars at risk." They expressed concern that this strategy could turn Twitter into a "mainstream Gab," an alternative microblogging site known for hosting far-right and extremist users, some of whom have been banned from Twitter.

"Brands are becoming more aware of their proximity to risky content or disinformation," the analysts wrote, "so they may shift their dollars to channels with better safety measures in place."

Weighing risk and reward

However, certain industries may benefit more from Musk's leadership than others. The frequently online executive frequently uses Twitter to muse and meme about cryptocurrency, a category that is more willing to take risks and is closely linked to Web3's Wild West. Based on Musk's tweets, the value of various coins has increased or decreased. Crypto exchanges have also recently tried to solidify mainstream legitimacy and adoption through heavier advertising plays.

"Any enthusiastic supporter of Elon Musk, including cryptocurrency advertisers, will lean in and buy more advertising with Twitter," Todd Krizelman, CEO and co-founder of MediaRadar, wrote in an email. "Elon carries a lot of weight with him. Premium national consumer brands, on the other hand, may be concerned about the content in the absence of regulations."

At the same time, Musk has made it clear that he despises traditional advertising. In 2020, his electric vehicle company, Tesla, shut down its public relations department. That way of thinking isn't always helpful for a company that makes the majority of its money from advertisements.

Parag Agrawal, the company's chief technology officer, has taken over as CEO. According to The Wall Street Journal, Musk may prioritize more experimental bets and has expressed interest in focusing more on subscription-based concepts like Blue.

"Ironically, brands may benefit as [Musk’s acquisition] might improve Twitter’s advertising offering," aforesaid Alistair Goodman, CEO of Emodo, the ad-tech unit of telecommunications giant Ericsson, over email. "There will without a doubt be multiplied financial pressure on the new homeowners to further evolve the advertising solutions in order that they'll command higher rates—perhaps with new more immersive ad experiences—while maintaining a brand-safe environment."

Musk is a savvy businessman who appears to understand how the ad-supported internet works. Enacting any type of great marketing and marketing switch-up in a single day could be distinctly disruptive for an organization that has frequently struggled with sales growth and getting customers enthusiastic about equipment past fundamental posts. On that front, Musk has recommended he’s open to an edit button and a longer individual count. On any given day, the government says a lot of lofty things and then doesn't follow through on them. A takeover may become less chaotic than the process of getting there.

"People expect Elon Musk to make changes, but I believe their ad-driven business will remain unchanged," Krizelman predicted.

Source: Marketing Dive