Twitter advertisers say they’re frightened about Elon Musk’s tweets and actions

Elon Musk held an enormous convention name for advertisers and greater than 100,000 different folks as we speak. He sounded considerate about his plans for Twitter, not sure about the way it was all going to work out, however solicitous of suggestions. “I solely received the keys to the constructing final Friday,” he mentioned, including later: “I’m open to concepts.”

The issue for Musk is the advertisers he has spooked since shopping for Twitter for $44 billion are unlikely to be swayed by any of this. They inform me they don’t thoughts what Musk says in outreach calls like this. They’re involved about what he does and what he tweets.

It is a new downside for Musk, who grew to become the world’s richest man by promoting electrical automobiles and constructing rocket ships, and never by caring about what different folks take into consideration him. Or, at the very least, not caring what controversy-hating advertisers take into consideration him.

However now he very a lot has to. For the time being, advertisers are Twitter’s total income stream, they usually aren’t proud of Musk. If he can’t flip that round, he’s in very large hassle.

And whereas Musk has finished actually spectacular stuff previously — kickstarting the electrical automotive motion with Tesla and personal area flight with SpaceX — Twitter is a unique animal. Whereas Musk appears to assume social media is a comparatively trivial downside to resolve in comparison with the engineering feats he’s discovered, he’s now in a really totally different trade, the place plenty of his earlier expertise might not apply in any respect.

Simply as worrisome: He seems to be doing this totally on his personal, improvisationally, with few folks round him who’re in a position or prepared to inform him that he’s mistaken.

You possibly can see an apparent instance of this deficit on Twitter (in fact) the place Musk introduced final week that the corporate had suffered a “large drop in income” as a result of advertisers had begun retreating. In the identical be aware, he blamed the advertiser erosion on stress from “activist teams,” and later floated a “thermonuclear identify & disgrace” marketing campaign towards entrepreneurs who pulled their cash. That’s: he threatened his would-be clients.

Which is precisely the type of factor promoting executives inform me troubles them about Musk and Twitter — that it doesn’t matter what he says when he talks to them, they’re frightened about his habits.

“His private Twitter deal with is introducing a stage of reputational threat that in my expertise, most Fortune 500 firms can’t settle for,” says Lou Paskalis, an promoting government who met with Musk and about 100 different trade officers through a Zoom name final week.

In that decision, Paskalis mentioned, Musk had the same strategy to the one he held as we speak: He earnestly engaged with entrepreneurs’ questions, emphasised his plan to wash up Twitter by introducing a “gentle paywall” of $8 a month for Twitter customers who don’t need their content material buried, and talked about creating a greater promoting expertise on the service.

Paskalis says Musk got here off effectively, if a bit “naive,” and that he had appeared to placate some advertiser worries. “I feel for many of us he moved the ball ahead,” Paskalis instructed me. “He didn’t rating a landing, however he gained floor.”

The following day, Musk laid off half of Twitter’s workforce, together with some variety of staff who labored on model security — a key advertiser concern. Paskalis requested him concerning the transfer on Twitter, and Musk responded by blocking him.

That’s a transfer out of the Musk playbook — he as soon as refused to promote a Tesla to a buyer who complained about Tesla in an open letter — and that has usually labored out tremendous for him. On as we speak’s name, he recommended that manufacturers and their executives ought to comply with his lead and let unfastened on Twitter extra: “Be extra adventurous. That’s what I’ve finished with Tesla and SpaceX and it’s labored out fairly effectively.”

However advert execs I’ve talked to strongly disagree. Whereas Musk says that there needs to be a distinction between Elon Musk, Twitter consumer, and Elon Musk, Twitter proprietor, advertisers received’t see any distinction in any respect. Particularly when he’s engaged in stuff like highlighting a gross conspiracy principle concerning the assault on Paul Pelosi, through a tweet he later deleted, or threatening his advertisers. Who, once more, are his clients.

“It’s one factor to see shoppers and say the best issues,” says a former member of Twitter’s gross sales group, who was laid off final week. “It’s one other to see his tweets.” Or, as a unique ex-Twitter salesperson instructed me: “Elon wants to comprehend that each tweet is a press release of coverage.”

Advertisers additionally say that, opposite to what Musk says, they’re not too frightened about stress from advocacy teams like Media Issues For America and the Anti-Defamation League, who’ve known as on advertisers to pause spending till Musk retains the present content material insurance policies and infrastructure Twitter had earlier than he purchased it.

“[Advertisers] cope with activists on a regular basis,” says an trade veteran who has purchased advertisements from Twitter previously. “They actually perceive how you can stand as much as stress. Him blaming activists? They’re laughing.”

Maybe the largest downside for Musk is the asymmetry between himself and his advertisers: He wants them as a result of he owes greater than a billion {dollars} in curiosity funds a 12 months. However they don’t want him.

Do not forget that the explanation Musk was in a position to purchase Twitter within the first place is that whereas some folks — most actually Musk — assume Twitter is essential, advertisers don’t. It’s a subscale digital advert platform, which is why it’s value a fraction of Google and Meta — two actually necessary platforms advertisers have to make use of. And digital promoting is already underneath stress, so entrepreneurs can be joyful to discover a cause to tug again spending on Twitter.

Even worse for Musk: Twitter’s advertisers, in contrast to those that depend on Google and Meta, are typically model advertisers — ones you’d usually see on TV, versus ones that need you to click on a hyperlink and take out your bank card. That’s a bunch of advert patrons that’s far more delicate to controversy than somebody promoting, say, app downloads or dietary supplements. “Entrepreneurs need predictability,” says a former Twitter advert particular person. “They don’t wish to be fired by their boss.”

On the threat of piling on, that’s not all. Since Twitter’s advert patrons don’t anticipate large attain, Twitter has been coaching them to anticipate to achieve a distinct segment however influential viewers: extra prosperous, extra refined, “extra left and proper coast,” as an advert purchaser instructed me this week. In different phrases, precisely the type of viewers an advertiser may assume can be prepared to go away Twitter if Musk’s chaos continues.

Can Musk repair this? Possibly? He’s sketching out a future the place customers spend plenty of cash on Twitter so he received’t be as depending on advert {dollars}. He additionally talks about making advertisements extra interesting on Twitter, and ultimately constructing a “backside of the funnel” advert enterprise — one that can enchantment to the type of advertisers who use Google and Meta.

However all of that may be a great distance off. Proper now, it’s the world’s richest man and a comparatively small group of people who find themselves frightened about giving him their advert cash. If he needs them on his facet, he’s going to need to do greater than say the best issues — he wants to vary who he’s. I’m not taking that guess.

Correction, November 9, 5:40 pm ET: An earlier model of this story misidentified an advocacy group. It’s the Anti-Defamation League.