The advertising situation on Twitter has been particularly dire since Musk acquired the company in late October
AFP file
From AFP
Published: Fri 25 Nov 2022 10:08 pm
Is it a dream or a possibility? Elon Musk wants to diversify Twitter’s revenue stream beyond advertising, a feat that none of the major social networks have yet succeeded in doing.
Social media ads are something of a gold standard and can be fine-tuned and tailored to individual users at scale and have been particularly lucrative for metas Facebook and Instagram, as well as Google.
“Facebook has pretty much set the standard for a social media ad model,” said Jasmine Enberg, an analyst at Insider Intelligence. “But that doesn’t necessarily have to be how social platforms make money.”
Faced with budget cuts from inflation-plagued advertisers and tighter regulations on the use of lucrative personal data, social networks make it logical that they “explore new techniques to monetize advertising,” she said.
The topic is a sensitive one for Twitter, whose sales are 90 percent dependent on advertising. Advertisers, on the other hand, don’t necessarily need Twitter and can turn to other social networks.
The advertising situation on Twitter has been particularly dire since Musk acquired the company in late October.
In recent weeks, half of Twitter’s top 100 advertisers have announced that they are suspending or otherwise “appearing to have stopped” advertising on Twitter, according to analysis by nonprofit monitoring group Media Matters.
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They fear being associated with toxic content as Musk, who describes himself as an “expression absolutist,” advocates more lax moderation.
Social media sites are testing two alternative solutions in particular: everyday user fees and content creator fees.
Forums platform Reddit has employed a hybrid model, making money through advertising, paid subscriptions, and digital coins that give users access to special privileges.
“It’s always difficult to charge for something that used to be free,” said Carolina Milanesi of research firm Creative Strategies.
“Unless you give something else or make a different product, you can’t go from not loading to loading,” she said.
While Twitter has been offering a paid subscription with additional features since last year, Musk wanted to increase the price to $8 per month and add account verification to the plan’s perks.
However, a partial launch was messy and led to the proliferation of so many fake accounts that the launch of the so-called Twitter Blue has now been paused.
“It’s not a bad idea to find a way to charge users for premium features and monetize users,” Enberg said.
However, she said that the perks offered by Twitter might not have been enticing enough and that the verification aspect should be more of a security feature than a monetizable feature.
Since paid subscribers — arguably the most active on the network — would see 50 percent fewer ads than non-paying users, the plan would “dilute the quality and size of the target audience for advertisers.”
Some newer platforms are trying to avoid advertising altogether, with no guarantee of permanence.
For example, on Discord, a live discussion social network, subscribers have access to more emoticons.
And in the fledgling photo-sharing app BeReal, users can bypass ads with in-app purchases for additional features, according to the Financial Times.
Twitter had around 230 million daily active users as of June, and Musk continues to congratulate himself that that number has grown since his acquisition.
But more users doesn’t necessarily mean dollars.
Snapchat, which also launched a paid version in June, has been gaining users, but not necessarily money.
Faced with this reality, platforms compete for content creators to attract and retain viewers — either taking commissions or making them pay to promote their messages and videos.
This is “a really big opportunity” for Twitter, Enberg said.
Twitter “has many celebrities and big-name influencers, politicians and journalists” with whom it could form mutually financially beneficial relationships, she said.
Milanesi added that while the network already offers some promotional tools, they are “quite expensive and not very effective”.