When Twitter first announced its intent (back in April) to be acquired by Elon Musk, Forrester said that disinformation and hate speech are ultimately at stake — and that ad dollars are at risk. In the days following last Friday’s closing of the deal, GM paused its paid advertising on Twitter. Soon after, IPG’s Mediabrands recommended that its clients also pause all of their ads on Twitter. And now, even more advertisers have done just that.

Chaos And The Economy Jeopardize Twitter’s Ad Business

While Musk was in New York City trying to calm advertisers concerned about brand safety, Twitter’s head of ad sales left the company. Twitter’s uncertain direction, especially around content moderation, means that reticence to advertise on Twitter will only be compounded by the volatile economy. CMOs will play it safe in 2023 as media budgets get slashed. This forces marketing leaders to stick to tried-and-true channels that help them get short-term growth wins.

No mainstream companies want to be in spaces where questions of brand safety are profuse. If Musk wants to keep Twitter’s ad business as part of the company’s long-term strategy, he has much work to do to earn brands’ trust. For now, marketers should take a wait-and-see approach with regard to their media investments on Twitter.

Twitter Has The Opposite Problem Of Netflix

While Twitter and Netflix are both in need of new sources of revenue, they face opposite scenarios. Netflix (which started out as a subscription business) can no longer rely on subscription revenue alone to grow — the company had to launch an ad-supported tier. Twitter, on the other hand (which relied on ad revenue as its primary revenue source), is at a crossroads. Over 90% of Twitter’s revenue comes from advertisers today. Should it become a pure-play subscription service or hybrid? As the company doubles down on subscriptions, how will (already skeptical) advertisers respond? To what degree will users actually pay $8 per month to subscribe?

Back in May, we pointed out that, at $2.99 per month, Twitter Blue wasn’t gaining traction because of a lack of user value — only a fraction of Twitter’s users were subscribers. We said that things such as exclusivity, status, and access begin to move the needle, but nonetheless, a subscription service is a hard sell. Musk’s current plan for its subscription model leans into “status,” with a controversial pay-to-play verification scheme. This is a big gamble for Twitter, as it could end up driving key content creators away in addition to already questioning advertisers. Is Musk disrupting the company too quickly?

Will People Pay $8 For Twitter Blue?

Forrester’s soon-to-be-fielded November 2022 Consumer Energy Index And Retail Pulse Survey will dive into what Twitter users want from a revamped Twitter Blue subscription service and how much they’re really willing to pay for it. Plus, we’ll address what this all means for brands. Look out for another blog post at the end of this month.

Tweet me your thoughts at @McProulx. Forrester clients: Let’s chat more about this via a Forrester guidance session.