Twitter’s daily advertising revenue has cratered 40% from the same time last year, according to a report that cites a senior Twitter manager’s message to employees.
The embattled social media platform is hemorrhaging ad dollars after Elon Musk’s October 2022 takeover that has put the future of the app in limbo. As the San Francisco-based company loses money, Musk has to pay down billions in debt he took on for the $44 billion purchase.
According to one estimate in a Financial Times report, the company’s actual valuation is now closer to $15 billion.
Siddharth Rao, an engineering manager who oversees the engineers behind Twitter’s ad tech, informed his staff this week that more than 500 advertisers have paused their spending since Musk’s takeover. Rao has recently replaced Luke Simon, a fired engineering director who was spearheaded Twitter’s revenue organization.
The struggle with advertising has left many with the impression that Twitter’s instability may lead to its demise as the ad downturn has led Musk to cut even more costs after firing 75% of the company’s 7,500 employees and closing a data center. Most of the salespeople handling ads were also let go.
At the core of advertisers’ pause are concerns over brand safety. Major advertisers were put off by Musk’s content moderation decision-making, including reinstatement of previously banned or suspended accounts, according to digital advertising executives and marketers who spoke to TheWrap.
Musk has said he wants “to diversify Twitter’s revenue away from ads in the long run,” but due to “continued deterioration” of the business, the company may not be able to generate free cash flow in 2023, according to The Information.
Whether Twitter will be able to meet its projected $3 billion revenue for the year while Musk handles a $1.5 billion annual interest obligation remains to be seen. Twitter reported revenue of $5 billion for 2021, the most recent year for which financials were available.
The newsletter Platformer first reported the steep advertising decline.
