When Elon Musk announced his desire to take over Twitter, netizens were hopeful that the self-proclaimed advocate of free speech would redeem the social media site. But as the days progressed, Twitter drew fire from all quarters, including employees and advertisers. Elon Musk’s Twitter strategy seemed to have caused more harm than help. It even prompted Meta Inc., CEO Mark Zuckerberg to comment on the imploding state of affairs.
While Twitter layoffs caused a furor in the media, Musk justified the move as part of a new Twitter strategy. Almost half the workforce was made redundant as the billionaire CEO sought to revamp Twitter’s public image and fortunes. However, if recent reports are to be believed, the company is facing a crisis in its core advertising business and daily revenue is down by almost 40% compared to January 17 of last year.
Meanwhile, another social media scion, Zuckerberg, has commented that he finds Twitter’s content moderation strategy “very interesting.”
Twitter Strategy and Declining Ad Revenue
Since Musk took over the helm at Twitter 2.0, corporate advertisers have been wary of engaging with the platform. The microblogging site has implemented numerous changes from increasing character to 4,000 characters to reversing its ban on political ads.
Although these moves look strategic and are expected to bring in increased revenue, recent updates reveal that these moves have not had the desired effect. A senior manager told employees that daily revenue is down by 40% compared to last year.
The news was first reported by The Information, and comes close on the heels of reports that nearly 500 of Twitter’s top advertisers have distanced themselves from the site after Elon Musk took charge.
The decline in advertising business would mean that the company will be unable to break even in 2023, a dream Musk hoped to turn into a reality by this year. Twitter’s ad revenue troubles could be traced to some major advertisers expressing their disapproval over the revised content moderation policies.
In what is part of a new Twitter strategy, Musk also laid off the sales team, who were responsible for collaborating with advertisers and enhancing the company’s advertising product. Before Musk’s purchase, the blogging site made most of its money from digital advertising.
All these factors appear to have negatively affected Twitter’s ad revenue as major advertisers like Omnicom and Interpublic Group have advised their clients to temporarily keep their business away from the social media site.
Twitter and Meta Job Cuts
Zuckerberg’s comment reveals that he is keenly watching Twitter’s progress as the company makes multiple content and policy changes to attract more daily users and revenue.
Both Twitter 2.0 and Meta have conducted layoffs last year and are looking to strategically position the companies to stay relevant in the coming years.
While Twitter layoffs have affected over half its workforce, Meta laid off nearly 11,000 employees in November 2022. After almost 18 years of stupendous growth, Meta’s stock fell 65% year-on-year as its metaverse failed to buoy investor spirits, coupled with decreasing daily users.
In a similar vein, Twitter’s layoffs, which were part of its cost-cutting strategy, also appear to have backfired as the company bleeds money. With a $1.6 billion interest payment looming, Musk might be forced to sell Tesla stock to come up with the money.
Both Meta and Twitter function in the social media sphere and have been under fire for their content moderation strategies. The layoffs significantly reduced investor confidence, as they signal that the company is preparing for a lean year ahead.
Mark Zuckerberg Eyes Twitter Strategy
Amongst the five big tech firms, Meta saw the biggest drop in its valuation. In December, Meta even launched a new tool to help businesses identify and remove violating content at scale. This does not erase the fact that its content moderation practices have come under fire by activists and governments in recent years.
As Twitter rolls out new content strategies, Zuckerberg is interested to see how things pan out. So far Twitter’s moves read like a bible on what not to do in the social media space.
At the DealBook Summit in November 2022, Zuckerberg commented, “it’s going to be very interesting to see how this plays out in terms of the approaches he’s taking.”
“I would guess that not everything is going to work, but I think some things might work,” he added about Twitter 2.0.
The Facebook CEO’s interest in Twitter can be interpreted as much more than personal curiosity. Facebook and Instagram have faced stiff competition from new-age apps like Snapchat and TikTok. The new Twitter strategy can be looked upon as a real-life experiment on what works and doesn’t with users.
Early this month, Meta’s contractor that runs Facebook’s main moderation hub for east Africa, Sama, announced that it would stop providing content review services for social media platforms. While Meta reiterated that it will “work with partners during this transition to ensure there’s no impact on our ability to review content,” reviewing Twitter’s content moderation strategies could be an exercise in preparing for the worst and best case scenarios.
As the way the world consumes content changes constantly, Twitter’s moderation policies can be looked at as a trial run of sorts on how social media companies must navigate their businesses. But as Twitter loses revenues from advertisers, it is clear that soft power is just as necessary as good policies to stay relevant and profitable.
