Is Twitter's free ads incentive enough for big brands to take the bait?

As the Elon Musk-Twitter drama continues to unfold, the bird app has incurred a sharp revenue loss. As per a January 18 report in technology newsletter Platformer, in the aftermath of Musk becoming the CEO, Twitter's daily ad revenue fell by about 40% year-over-year.

The Information reports that 500-plus Twitter advertisers have paused their spending on the app since October 2022. In Q422, Twitter’s revenue fell by 35% YoY to over $1 billion – it’s 72% of the platform’s internal goal for the quarter, according to a slide shown to employees on January 18.

This is a huge cause of concern for Musk and company. To lure the advertisers back into its fold, Twitter has offered them a lucrative opportunity, i.e., giving them free ad space.

Twitter will match the advertisers’ ad spending by up to $250,000, according to emails reviewed by ‘The Wall Street Journal’. The full $500,000 in advertising must run by February 28, the report added. 

This does raise quite a few eyebrows, as it’s something that platforms don’t usually offer. However, Sanjay Mehta, joint CEO, Mirum India, shares that it’s like a reiteration of practices that have been used in the realm of digital media over the years.

"Such practices have been active for at least two decades, as far as digital media is concerned. Large publishers and media owners have offered free of charge and dollar-to-dollar (Rs to Rs) offerings to get brands to advertise on their domain.”

Will the new policy halt advertiser exodus? 

Mehta has mixed feelings. He believes that some advertisers will continue to have their own concerns about Twitter, given the recent controversy, and may not come back. "While some may react, because the world is reacting, just to avoid FOMO." 

Dr Kushal Sanghvi, head - India and SEA, CitrusAd, believes it’s a statement made by a platform - that it’s here to stay. 

“There’s been a lot of trust issues with the company since Musk took over. However, at the end of the day, there’s no denying Twitter’s influence. For brands, it’s instrumental as far as audience engagement goes. Many powerful campaigns have come out of Twitter. The message is clear: the platform isn’t going anywhere and will come back in a big way.”

Sanghvi is of the opinion that the move is more of a temporary arrangement to woo advertisers back. It reinforces the fact that the company means business. 

“This strategy is a make-shift arrangement to woo the advertisers, who can’t live without Twitter and whose business requires them to be on the app, back. It's also a great ‘leverage’ opportunity for the advertisers.”

Sanghvi believes that in India, a handful of companies operating in sectors like BFSI, airlines, hotels, FMCG, and telecom, may be interested in investing in, and getting back on, Twitter.

Sahil Shah, president - digital experience, Dentsu Creative, agrees with Sanghvi about the move having a short-term impact, and calls it a ‘knee-jerk response’. 

While the number of big advertisers might not be large, Shah shares that the Indian market is a significant one for Twitter, in terms of ad volumes.  

“Some advertisers in India have also questioned the whole Twitter drama. The country isn’t insulated from the development and many clients have also shied away from the platform. The impact on India may not be that big because, as per my estimate, there is less than 1% of digital ad spent on Twitter.” 

Mehta of Mirum India opines that the new move is actually a great opportunity for new brands that haven’t explored the platform yet. “This program will serve as a litmus test for new brands - whether Twitter, as a platform, can deliver media or business goals.”

Rajiv Dhingra, founder and CEO, RD&X Network, shares that though Twitter doesn't have a big pie in the ad budgets in India, its reach is coming from influencers who had a package deal to endorse across platforms. He shares, “India may not be impacted by the global developments at Twitter as the platform’s influence is significant higher than others. But, the problem is that this influence does not translate into ad dollars. Twitter’s ad inventory is not exciting. Hence, ad spends directed at the platform go towards influencer marketing rather than the media budget," Dhingra comments. 

Marketers that afaqs! spoke to pointed out that the new move is likely to reverse the ‘wait and watch’ advisory that global agencies like GroupM, Omicron, etc., had announced late last year. 

Mehta opines, “We’ve seen this happening in the past, when both Google and Facebook were under the radar for the wrong reasons, but things became normal after some time. It’s just a matter of time before something like this happens with Twitter.”