What you need to know:

• About half of Australian advertisers that left Twitter when Elon Musk took over are returning, but with much lower spends (between 20-50% down).
• Elon Musk revealed that global ad revenue is down by 50 per cent and cash flow is poor but July is looking more promising.
• Advertisers and agencies want to know why they should advertise on Twitter and what the platform stands for.
• A backlash against toxicity and Musk's tweets has scared away some brands, but agency groups are confident in their brand safety controls.
• Threads is not an existential threat to Twitter, say media buyers, and is not expected to eat Twitter's market share.
• Twitter has rolled out some promising new products, but the many advertisers are still adopting a 'wait and see' approach for the platform.

The blue bird is not dead but an Elon Musk-shaped albatross still hangs around its neck. The platform has shed 50 per cent of its global advertising revenue since the SpaceX and Tesla chief took over last October. 

With a new CEO in former US TV network sales boss Linda Yaccarino, and a new competitive raid in Meta’s Threads, Mi3 canvassed the market on Twitter's state of play what next for Twitter 2.0. 

First, Australian brands which pulled ads in the wake of the Musk takeover and amid job-cutting chaos are starting to return, albeit with far smaller investments. Some are in “test and learn phase”. 

Media buyers warned that claims of Twitter’s demise in the face of new competition from Threads are premature and that the Zuckerberg disrupter could be the jolt the microblogging site has needed to get back on track. They add that a conveyor belt of new products coming out at rapid click offers hope the blue bird might fly again soon after last November’s Musk-fuelled bonfire.

Nonetheless, Twitter’s relatively small (but well-regarded) Australian team of between 12 and 20 people (depends who you ask) has its work cut out to make the platform appear less toxic and more relevant against its competitive set to the advertising needs of today.

After the self-proclaimed Chief Twit sensationally cut more than half of its global workforce late last year – including large swathes of its trust and safety teams – more than 50 of the top 100 advertisers on Twitter pulled advertising off the platform, including the likes Audi, General Motors, VW, Merck, Ford, Coca-Cola, Kellogg’s and more.

Calm after the storm

The situation in Australia is different compared to Twitter’s major markets. Twitter ranks eighth in terms of Australian users (circa 5.8 million monthly users, per Social Media Pert stats), trailing the likes of TikTok, LinkedIn, Pinterest and Snapchat outside of the big three (YouTube, Facebook and Instagram). 

Media agency leaders and digital experts said Twitter isn’t as dominant a force in Australia as it is in the US and Europe and the pullback in ad spend has not been as severe on local media budgets. 

GroupM Australia National Head of Social and Influencer Marketing, Max Thorley, said Twitter now operates in “the most competitive environment that the social media space has ever seen with so many viable social platforms. 

“Gone are the days where if you wanted reach and media efficiencies, you could only go to one place,” he said. “There were absolutely some brands who were and are being cautious in the market but there are brands that do need or want to play in that space and they came back to Twitter after it settled down because it is still a very relevant platform.” 

Emilia Chambers, the new Head of Strategy at independent digital agency The Pistol said Australian advertisers turned off Twitter “when everything went a bit haywire” during the tumultuous weeks after Musk’s takeover, but are starting to come back.

Chambers, the former Head of Digital at Carat Victoria, estimates about half of advertisers pulled from the platform in a mix of global brands operating in Australia that exited globally and larger domestic companies concerned about the reputation risk of staying put. It's somewhat inconsistent given their budget pardons of other social platforms for arguably more explicit indiscretions over many years.  

“There are some clients who have taken a step back and waited for the storm to pass,” Chambers said. “Now that things are a bit calmer they're starting to invest a bit more in the platform, because there is still quite a niche audience for some brands.”

On the upside, Chambers said the advertiser pullback had “decluttered” Twitter and brands are using it tactically to get more cut-through than possible on rival platforms.

In the last quarter of 2022, Twitter’s Australian ad revenue fell year-on-year by 46% to $3.9 million, according to Standard Media Index data reported in the Australian Financial Review.

“What I think is probably more interesting (than advertisers returning) is the level of spends," Chambers said. "We tend to see that advertisers coming back are spending far less than what they used to pre-Musk." That spend decline is usually 20–50 per cent of what was allocated before the billionaire's takeover. In some cases, brands are only budgeting 20 per cent of the pre-Musk era and returning to a “test and learn” phase.

This scenario is echoed by a holdco media agency boss who agreed to speak to Mi3 on the condition of anonymity. The exec said clients are keen to learn what Twitter 2.0 has to offer but so far are none the wiser.

“The biggest conversation I’m having with CMOs is what is the role of Twitter in my media plan? Will it drive my brand, will it drive performance metrics or does it do both? And what's the best way to use that platform? We need to find out what it stands for again under the new CEO Linda Yaccarino. He’s got to come in and define why advertisers should be using Twitter.”

Media agency executives are optimistic Yaccarino, the former NBCUniversal advertising chief, could steady the ship following a rocky eight months with Musk at the helm. But a lot will depend on how much rope she is given to guide Twitter.

What’s Twitter’s role?

Part of Twitter’s problem is confusion around its new role in the social media ecosystem. 

Musk’s version of Twitter as the “internet’s town square” has been met with derision and concern from marketing execs, with one describing it as “more than a little bit terrifying”. Privately, Mi3 has been told the toxicity of Twitter 2.0, as well as a swathe of Musk’s “offensive” tweets spreading conspiracy theories and crude jokes, had scared brands away.

One agency leader confided: “Twitter needs to prove it is a safe space for brands to play. How can we recommend it as a platform if CMOs are seeing this sort of schoolyard shitposting by the owner? They don’t find it amusing.”

It’s not just the advertising industry that has been alarmed by the direction of Twitter in recent months. 

In June, Australia’s eSafety commissioner, Julie Inman Grant, who set up Twitter’s Australian public policy team, which has since been disbanded by Musk, served a legal notice against Twitter for a “worrying surge in hate online” and an “outsized impact on toxicity”. This follows the platform reinstating 62,000 banned or suspended users, with 75 of these accounts having more than 1 million followers.

An eSafety spokesperson told Mi3 this week: “eSafety’s most recent notice to Twitter sent in June, notes that reports of online hate on Twitter appear to have increased since the company’s acquisition in October 2023. [We have] received more complaints about online hate on Twitter than any other service in the 12 months to May 2023, and an increase in complaints about hate on Twitter since its acquisition in October 2023.”  

Brand safety remains a pressing concern although agency groups are confident they have the tools and the know-how to monitor and police platforms, advising clients of the risk level involved. One agency group executive said brand safety is not taken in isolation of individual platforms and that “Twitter has an orange risk level, but to be blunt there are no social media platforms where the risk level is green.”

A positive new development under Musk has been the introduction of negative keyblocking for ads. As one media exec explained: “Hypothetically, one of our clients could run ads on Twitter and it would never appear next to the words ‘Elon Musk’, which is something I might have recommended to buyers to avoid controversy. So that's really good from a brand safety perspective.”

Another step forward is that Twitter has launched a commerce product suite that allows users to shop on live streamed video. “The product roll out has been rapidly improving compared to 12 months ago.”

Is Threads a ‘Twitter killer’?

In many markets, including Australia, Twitter still plays the role of a “second screen opportunity” for brands advertising on traditional media around big events. This is still the case in sport, culture, politics and other major events, including the AFL and NRL grand finals, the Super Bowl, FIFA World Cup and tent pole TV shows.

That second screen community role, however, is coming under threat from increasing competition, industry insiders argue.

Two weeks ago, Meta launched its own micro-blogging app Threads, which has already racked up 150 million downloads (of mostly Instagram users) and has one-fifth of the weekly average user base of Twitter.

Meta has previously said Threads will not begin commercialising the platform until 2024. Does it pose an existential threat to Twitter, the microblogging site it has cloned?

Almost everyone speaking to Mi3 believes it is too early to call, and the social media ecosystem is large enough to accommodate both.

One digital media leader said that in Australia there's only 6.1% of Twitter users who are not using Instagram, so the market share opportunity from Twitter is minimal, even if some Twitter users spend a bit more time on Threads. The Meta app also currently lacks the functionality to be a public square, especially around trending topics, so talk of Twitter’s demise appear premature.

The Pistol’s Emilia Chambers offers a different take on the Threads threat, arguing that it won’t be a case of everyone joining Threads are deactivating their Twitter accounts.

“There have been a few little sites that have claimed to be the next Twitter that haven’t taken off,” she added. “With the launch of Threads, it might be that bit of a kick that Twitter needs to start focusing on the platform in a more serious manner, so it could actually benefit them.”

Atomic 212 National Managing Director Rory Heffernan points out that Twitter’s weekly reach in Australia is only about 12 per cent of the population, and while Threads can potentially take share off Twitter, another social media dark horse is already having a larger impact.

“Reddit probably got a bit of a bump with the Elon news and the circus that went along with that,” Heffernan said. “They are on the opposite trajectory to Twitter where they've scaled up their teams here. In terms of ad sales, they're probably doing a better job of it than Twitter at the moment.”

Twitter Australia managing director Angus Keene did not respond to Mi3’s request for comment, but knows too well the challenge ahead. 

The overriding sentiment from the market is that after a period of instability and blood-letting, the blue bird is on steadier ground and rebuilding. But advertisers still want to know what Twitter 2.0 stands for, and whether it stands out from its competitive set.